Bank of England Governor Andrew Bailey said ‘farmers were right' to be sceptical about food price inflation easing quickly, saying that they were continuing to face higher costs of production
Farmers ‘were right' to be sceptical on food inflation easing quickly, with the link between global food prices and energy costs a key factor in prices.
That was the message from the Governor of the Bank of England, Andrew Bailey, when he addressed the NFU's Henry Plumb Memorial Lecture.
Energy prices
Mr Bailey said: "Energy prices have had a large, indirect effect on food prices" and that "more than 1.5 percentage points of food price inflation can be attributed to higher energy costs in the food supply chain. This is significantly more than in other sectors of the economy."
See more: Arla chief to lead AHDB - 'my passion is working with farmers, for farmers'
He said ‘farmers were right' to be sceptical about food price inflation easing quickly, saying that they were continuing to face higher costs of production. He also noted that farmers have told him they have found it hard to find the labour they need.
On recent uncertainty within the global economy, he said poor weather was ‘undoubtedly a factor'.
Inflation
"Harvests have been poor in many of the world's agricultural regions and strained supply chains affected the distribution of agricultural commodities and food products as well as other goods," he said.
See also: 'Engaged and attentive': TFA's George Dunn meets new Defra Secretary
"In the UK, a combination of heavy rainfall and droughts caused the wheat harvest to drop to the lowest level in 40 years in 2020."
He also paid tribute to Lord Plumb who he quoted, saying for farmers to thrive they must have the ‘opportunity to earn a reasonable price to ensure food production in our countryside'.
He ended by noting the value he found from speaking with farmers across the country, adding there was a lot to learn from them.
