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Oxford Farming Conference – ‘Is the food supply chain broken?’ report launched

Agri-TechE Article

A collaborative approach is needed to move the UK agri-food industry from “one that survives to one that thrives”.

This is one of the messages emerging from the report ‘Is the UK food supply chain broken?, launched at the Oxford Farming Conference 2024.

The report – which is based on interviews with 40 stakeholders from across the industry – recognises the role that innovation and risk-sharing has played in averting crises over recent years and has made a number of recommendations.

The authors conclude that instead of a ‘cheap food policy’ based on the assumption of abundant imports, future governments could leverage the strengths of the sector and the country’s natural capital and choose to champion UK-grown food for home consumption.

Long term agreements would support innovation

Agri-TechE Director of Communities Becky Dodds has reviewed the issues highlighted by the research and sees opportunities for agri-tech.

Becky comments: “Of particular interest were examples in the report where retailers had entered long term agreements with their suppliers to share risk through cost of production pricing models.

“It is vital, however, that these types of contracts do not penalise improved productivity. Instead, these collaborations could enable joint investment in approaches that will overcome intractable issues in the industry and improve sustainability for the longer term.”

Agri-TechE supports an innovation ecosystem that addresses real-world problems through innovation in technology, production methods and business models. It brings together farmers and growers with tech developers, researchers, and technical and commercial service providers, but greater involvement by the entire value chain would be a gamechanger.

However, despite significant progress being made in the development and adoption of agri-tech, scale-up is still an obstacle. Becky argues that retailers have much to benefit through greater support of emerging technologies.

She says: “Increased co-design and cost-sharing in the development of agri-tech would accelerate the development of commercially viable solutions and meet the needs of the whole supply chain.

“In this way the UK agri-food industry would move forward together, to become independently profitable.”

Review of the OFC report: ‘Is the UK food supply chain broken?’

The report ‘Is the UK food supply chain broken?’ observes the new business landscape of today’s supply chains – with volatility created by geopolitical challenges, unprecedented inflation, increased interest rates, climate change and the cost of living crisis. It recommends everyone responsible for feeding UK consumers to re-think their approach to supply chains before it is too late.

It then identifies a number of factors that have ‘broken’ the supply chain and makes recommendations for industry and policy:

  • Cost of production increasing – labour contributes 50% of costs, and wages increased by 28% between 2022-24. The supply of skilled workers has decreased with migration restrictions.
  • Input costs increasing – fertiliser prices increased by 77.7% from 2021 to 2022 (peak inflation was 200%). The last UK production plant has closed. Energy costs are similarly inflated.
  • Change in retail industry and contracts – the big four (Tesco, Asda, Sainsbury’s and Morrisons) have lost their share of the market (77.4% in 2011 to 64.4% in 2023) to newcomers Aldi and Lidl. This has resulted in a squeeze on margins and change in contracts to long-term fixed price.
  • Audit cost – the average financial cost of an audit is £2,000 – £2,500, and audits can take up to two days to complete. Some producers are audited almost weekly, with one producer saying they had received 190 audits in one year, many of them unannounced.

However, investment in innovation has improved productivity.

The report gives the example of soft fruit production, which has grown in value from £206m in 1996 to £1.5bn today. It credits this expansion to investment by the sector in innovations including varietal development, new growing techniques, and use of technology to extend the growing season from six weeks to six months.

Agri-tech can facilitate change

In many cases agri-tech is part of the solution and it offers potential to change the narrative. To illustrate the opportunities, we have highlighted a few projects from the ecosystem.

B-Hive has collaborated with nationwide potato supplier Branston Ltd and Harper Adams University to improve productivity in potato growing, harvesting and storage.

Precision livestock production – for example Breedr is enabling the production of ‘digital twins’ of real-world cattle that can be traded online, and tools to support more precise delivery to specification. This is improving the value of the contracts for suppliers and the consistency of supply for meat processors.

Price risk management – Stable uses data science to manage risk against price rises. Clients customise a contract to insure themselves against volatile prices and pay-outs are automated.