Lincolnshire's QV Realisations, a member of the AH Worth Group specializing in potato packing and processing, announced its closure in June, leading to the loss of 200 jobs. This event was not isolated; it followed the downfall of UK Salads, an Aldi supplier, to Gomez—a Kent-based fresh produce company—in February, and Bardsley, the UK's second-largest apple supplier, also disclosed cessation of operations despite investment from global agricultural group Camellia. These closures highlight the broader challenges within the UK's food sector, which are marked by financial strain.
According to Interpath Advisory, the food sector saw nearly double the insolvency rate in 2023 compared to pre-pandemic levels, with 450 firms declaring bankruptcy last year. The trend continued into the first five months of 2024, witnessing 168 insolvencies within the food and drink sector. Tom Swiers, director at Interpath Advisory, noted, "The number of administrations for fresh produce were high last year, certainly for fresh produce. For family-owned smaller businesses it's been tough. The cost of debt spiked, and today, the rates of insolvency are still high." A Riverford Organic Farmers survey revealed 62% of British farmers feel at financial risk, with 61% considering abandoning their farms within the next 18 months, underlining the sector's volatility and financial pressures.
Will White, sustainable farming coordinator at Sustain, emphasized the sector's declining year-on-year performance, increasing reliance on imports, and the emerging food resilience issue. The challenges, including inflation, energy price stabilization, and the aftermath of tough times, persist, affecting the sector's capacity for future investment and survival. The industry faces compounded pressures from hyperinflation, interest rate hikes, and production cost increases, squeezing margins and challenging the sector's sustainability.
Concerns over food security have been raised, with Dr Clive Black, a director at Shore Capital, criticizing the lack of support and recognition for the sector's importance. The fresh produce industry's chronic underinvestment, volatility, and uncertain contracts hinder its growth and resilience. The sector's consolidation could further centralize economic benefits, impacting rural communities negatively. Calls for a more unified policy approach and increased investment underscore the urgency of addressing the sector's challenges to ensure a secure and sustainable food supply for the UK.
Source: Wicked Leeks