'Sustainability and growth - it’s not one or the other'

That the UK’s price and availability issues are not worse is a tribute to our hard-working food and drink industry.  Everyone I speak to talks about the unprecedented pressures caused by the series of shocks that have hit us – the complexity of disentangling the UK from the EU Single Market; feeding the nation in a global pandemic while protecting the health of the four million people who work in the food and drink supply chain; and dealing with the energy and ingredient supply shocks caused by the war in Ukraine. 

There’s no disguising the stresses and strains all this has put on businesses, their people and their systems.  Diligence and ingenuity got them through, while resilience has been eroded.  This is plain to see in rising insolvencies across food and drink manufacturing – now more than double what they were in 2019.

The good news is food and drink price inflation appears to have peaked, and we hope it continues to fall.  But that isn’t a given.  What worries us is the drivers for inflation have been so broad-based – from energy, ingredients and labour to logistics and packaging, alongside the increased cost of borrowing and the slide in the value of sterling.  While the cost of some inputs are falling, this isn’t consistent.  Some continue to rise.

And that’s where environmental sustainability comes into the equation.  Take sugar for example – it’s nearly 50% more expensive than it was a year ago.  A significant contributing factor is last summer’s drought, making the European sugar beet crop its worst in 20 years.  This is just one example of increasingly unpredictable weather patterns causing ingredient shortages and pushing up prices.

Businesses continue to drive down costs but what’s critical too is that they also continue to invest in environmental sustainability and in driving carbon emissions out of the supply chain.  These unpredictable weather events and their impacts are sounding a clear warning – we must redouble our efforts to arrest climate change, including to secure global food and drink supplies.

So while we bear down on inflation we must continue to invest in the future, as many businesses are, crucially in sustainability and growth.  It’s not one or the other.  Government would do well to internalise that too – the UK’s economic woes won’t be solved only by driving costs out of businesses.  We all need to be good at doing more than one complex thing at a time. 

Karen Betts is the chief executive of the Food and Drink Federation

This article was originally published in Food Management Today. (p.26)