Farmers still making derisory profits selling to supermarkets, report shows

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UK farmers continue to make derisory profits when selling to supermarkets, often left with far less than 1% profit from the food items they produce. 

That’s the headline finding of a new report from the food and farming charity Sustain.

Sustain looked at five everyday amounts of food stuffs – apples, cheese, beefburgers, carrots, and bread – and found that, after intermediaries and retailers take their cut, farmers are sometimes left with far less 1% of the profit.

For example, for a wrapped, sliced loaf of bread, the cereal farmer spends 9.03p yet receives an almost negligible profit (0.09p) on a selling price of £1.14, but for a loaf of Real Bread sold in an independent bakery they make 0.5p profit. For 4 beefburgers the processor gains ten times the profit of the beef farmer. A carrot grower spending 14p per bag and selling to the supermarket supply chain gets almost negligible returns. (see note 4 for more results and the report).

The report Unpicking Food Prices: Where does your food pound go and why do farmers get so little? (examines where the money spent on the five everyday food products goes and why that matters. In the report, the researcher details the typical costs and profits allocated to each part of the chain from farmer/grower, through intermediaries and processors to the retailers.

Despite battling extreme weather events like flooding and drought and facing soaring energy and production costs, Sustain’s findings suggests farmers received less than 1% of profits if supplying a supermarket chain. Instead, profits are directed to intermediaries like processors, transport companies and retailers. By contrast, in shorter chains run by social enterprises like vegetable box schemes and co-ops, more value reached farmers and their workers.

The charity is calling on government to beef up supply chain regulations making them fairer for farmers.

Vicki Hird, head of farming at Sustain said: “It is astonishing how little of the money we pay for our food ends up in the hands of the farmers and growers. Farmers carry a lot of risk and work in difficult conditions to put food on our table. We also expect them to look after our landscape and our nature – and want them to do more of that in the future including protecting nature and helping to cut 30% of food based climate changing greenhouse gas emissions. If they are to do that, they need more money in their businesses. That money should not leach out of the system into the coffers of food industry intermediaries and supermarkets. 

“If we’re to give our farmers the chance to change how we produce food, they need to keep more of the value so they can invest and use new approaches. We should not let intermediaries and food buyers hold all the bargaining chips. Crucially, our report shows that paying farmers more need not mean higher food prices so retailers cannot use that excuse – there would be little impact on many products’ retail prices if farmers were paid more. We make strong recommendations on investing in better routes to market, regulating all supply chains, and building transparency.”

The report’s researcher Professor Lisa Jack, University of Portsmouth, said: “Our food systems have very high production and overhead costs, yet what profits there are, could be shared more fairly along the supply chain, supporting not just affordable food but better incomes for those working in the industry”.

“Farmers make more money selling into this transparent, ecological supply chain to invest in their sustainable, organic businesses – which are the future of farming and our countryside”

Additional researcher Harriet Hammans of City, University of London noted that: “Three times more of your food pound goes to farmers with every purchase you make from your local Better Food Trader or not-for-profit food hub. Farmers make more money selling into this transparent, ecological supply chain to invest in their sustainable, organic businesses – which are the future of farming and our countryside. Your money also goes towards paying staff who work so hard in the supply chain more fairly, and supporting an innovative, socially conscious trader which has the potential to scale up in the future.”

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