Food security concerns grow as Budget inaction amplifies industry unease - research
Ongoing costs and compliance pressures are making food and agribusinesses more selective about investment, according to research undertaken for the Mills & Reeve food and agribusiness outlook.
The research reveals that the sector is now focused on productivity, resilience and commercial return, with concerns growing about the future of the nation’s food security.
It also reveals that multiple factors such as energy costs and supply chain logistics are impacting food security.
A survey of UK food and agribusinesses has shown that of the food security concerns chosen by respondents, energy costs accounted for the largest share (21 per cent), followed by weather events/access to water (19 per cent), supply chain logistics (13 per cent) and employment costs/workforce availability (12 per cent).
The findings come as the government faces heavy criticism from the sector over its failure to support British food production in October’s Autumn Budget.
The NFU described it as a ‘missed opportunity’ following ‘warm words’ in the summer over food security.
Last month, 180 food experts, including academics, business leaders, community groups and food partnerships, delivered an open letter to prime minister Andy Burnham.
In it, they urged the government to make the UK’s food system more resilient, warning that the current system ‘is not fit for today’s or tomorrow’s challenges’.
While the chancellor announced wider measures to support the sector, including an extension to red diesel relief, the temporary suspension of tariffs on fertilisers, as well as suspensions on food import and food/drink manufacturing tariffs, for many, the Budget failed to provide the ‘breathing space’ needed.
With no announcement on the ‘investment-stifling’ family farm tax, the topic of succession also remains high on the agenda for businesses in the sector.
The research has highlighted that 70 per cent of respondents are actively taking steps around succession in the ownership or control of their business.
Among those taking steps around succession, more than two in five respondents (44 per cent) cited tax and estate planning as the leading driver.
However, with pressure on cash flow impacting food and agribusinesses, attention is also turning to how technology can improve efficiencies.
Cost saving, including scale and efficiency, accounted for 64 per cent of the primary drivers of AI adoption selected by respondents. Separately, over a third (36 per cent) expect workforce reductions as a result of agritech within the next one to five years.
Craig Hodgson (pictured), a partner at Mills & Reeve, who co-leads the law firm’s food and agribusiness sector group, said: “Leading figures across the sector have made their views very clear in recent weeks over growing concerns around food security.
“Those sentiments have now been echoed by food and agribusinesses standing at the coalface – those dealing with the knock-on effects of rising energy costs, environmental factors, supply chain disruptions and workforce pressures.
“These, and other interconnected pressures, are naturally impacting on market confidence, the long-term resilience of the sector, and the commercial and investment decisions being made by businesses.
“Our findings show that while issues such as food security, costs and regulatory pressures remain significant concerns, businesses are also taking practical steps to strengthen their position for the future.
“This includes making more deliberate investment decisions, exploring how technology can drive productivity and efficiency, responding to changing consumer demand and planning for long-term succession.
“Together, these actions point to a sector focused on building resilience while preserving flexibility for the future.”
