Food shortages could last a month, government says; ‘too soon’ to stop interest rate rises, says BoE’s Mann – business live

Here’s a video clip of Thérèse Coffey, DEFRA secretary of state, telling MPs that British people should “cherish the specialisms” in UK food production, as they struggle to buy salad vegetables in the current shortages.

As covered earlier, Coffey’s point is that consumers want a ‘year-round choice’, a demand which supermarkets and growers round the world try to meet.

Without that, we would be on a diet of turnips, not tomatoes – not that people SHOULD be….

DEFRA secretary of state Theresa Coffey has suggested that UK shoppers would be eatin turnips this winter, not hoping to buy tomatoes, without overseas imports.

Coffey was asked by Conservative MP Selaine Saxby whether she agreed that supermarkets import “far too many” products, and the UK should be eating more seasonably to support British farmers.

Coffey said that it was important to “cherish the specialisms that we have in this country”, and told MPs:

“A lot of people would be eating turnips right now rather than thinking necessarily about aspects of lettuce, and tomatoes and similar.

But I’m conscious that consumers want a year-round choice and that is what our supermarkets, food producers and growers around the world try to satisfy.”

This may be a gift to the Daily Star, who could potentially reprise their efforts with Liz Truss and a lettuce…. perhaps with turnip-lover Baldrick and a cunning plan…..

Sky News are reporting that the government is preparing to overhaul the board of energy regulator Ofgem, by replacing a slate of directors this year.

The energy regulator has faced intense criticism over its handling of the prepayment meters scandal, on top of the collapse of a swathe of the energy supply chain industry in 2021 and 2022.

And with several executives’ terms expiring this year, or having expired already, Grant Shapps – the Secretary of State for the Department for Energy Security and Net Zero – is apparently pushing for new blood.

Here’s the story:

Sky News understands that the Department for Energy Security and Net Zero (ESNZ) has begun recruiting a new chair for the watchdog, as well as four non-executive board members.

The Ofgem board currently comprises Professor Martin Cave, who will step down as chairman in October when his five-year term expires, a slate of independent directors and Jonathan Brearley, its chief executive.

Two non-executives who have already departed will be replaced, while two more – Lynne Embleton and John Crackett – have terms expiring later this year.

A further two board members are due to serve until 2025.

An Ofgem spokesperson said its chairman “will not be seeking reappointment for the role”.

More here.

Households are heading for a “crunch point” in April as energy bill support is set to fade away and the moratorium on force-fitting prepayment meters ends, MPs have been warned this morning.

Citizens Advice said households are going to come under increased pressure, with averge costs set to rise during the summer when energy use is lower.

It comes as household bills are set to soar by around £500 on average, hitting £3,000 per year for the typical home from April.

Bills are currently set at £2,500 for the average home – and households have also been getting vouchers for £400 spread over six months.

Meanwhile, energy suppliers have been banned from installing prepayment energy meters under warrant after concerns about their behaviour were raised. But that ban will come to an end in a little over a month.

Andy Manning, principal economic regulation specialist at Citizens Advice, said:

“We’ve got the moratorium on forced installations of prepayment meters at the moment, but that’s due to expire at the end of March. The end of March is also when the support schemes fall away, so it seems there’s a real crunch point when we get to April 1.”

Speaking to MPs on the Public Accounts Committee, he said the situation is “of concern”.

UK tomato growers have reassured customers that there should be “significant volumes” of British tomatoes on supermarket shelves by the end of March, as retailers impose buying limits to cope with a shortage.

The British Tomato Growers Association (BTGA) said shortages are mainly down to a lack of imports but the local growing season is due to begin soon.

The BTGA said in a statement:

“Many people have commented on the current lack of fresh tomatoes in some supermarket stores.

“Whilst this is predominantly a consequence of the lack of imported product at this time of year, the British season will soon begin and we expect significant volumes of British tomatoes on shelves by the end of March and into April 2023.

“The British tomato season runs from the end of March until November each year.”

The head of Spain’s largest farming association has pointed to Brexit and its impact on transportation, bureaucracy and border controls as the underlying cause of the UK salad crisis, saying there has been no major drop in production among his members.

Alfonso Gálvez – who serves as general secretary of Asaja, which represents farmers in the Murcia region, said he was puzzled by media reports of weather-induced shortages.

“I’ve seen these articles but I don’t understand why they’re talking about shortages here in Spain,” he said, adding:

“Things are normal here so far this season so I don’t know if it’s more a problem of UK logistics since the Brexit regulations came into effect.

There’s enough produce to supply the market and the vegetable season is happening pretty normally.”

While he acknowledged that rising costs had led to a drop in production for some growers – and frosts had affected some artichoke and lettuce crops – Gálvez said those issues were not serious or widespread enough to have significantly reduced market supplies.

The UK shortages, he suggested, may have more to do with bureaucracy and logistics than the weather.

Here’s the full story, by our correspondent in Madrid, Sam Jones:

British businesses’ and households’ inflation expectations for the year ahead remain too high for the Bank of England to be confident about inflation returning swiftly to its 2% target, Bank of England policymaker Catherine Mann has warned.

In a Q&A session after her speech this morning:

“We have an inflation problem. That’s the bottom line.”

Inflation was 10.1% in January, more than five times the Bank’s target of 2% per year.

Having spoken about the continued need for higher interest rates, Mann added:

“I don’t think we are in a restrictive stance, particularly.”

UK retailers expect sales volumes to fall next month, after holding steady in February, as rising cost of living eats away at disposable incomes.

The Confederation of British Industry’s (CBI) distributive trades index has risen to +2 this month from -23 in January. Economists had predicted a smaller recovery, to -13.

But a measure of expected sales in the month ahead fell to -18 from -15.

Martin Sartorius, CBI principal economist, says:

“Whilst retail sales volumes were largely unchanged in the year to February and slightly above seasonal norms, firms remain pessimistic about their business outlook and are bracing themselves for yet another fall in sales next month”

Thérèse Coffey, DEFRA secretary of state, has predicted that the UK’s fruit and vegetable shortages could last another two to four weeks.

Responding to the urgent question in parliament, Coffey says UK supermarkets have restricted supplies to ensure that “everyone still has access to enough of the different fruit and vegetables” available.

And she predicts that the shortages could last at least a fortnight, and possibly up to a month, saying:

I’m led to believe by my officials, after discussion with industry and retailers, we anticipate this situation will last about another two to four weeks.

It’s important that we try and make sure we get different sourcing options, and that’s why the department has already been in discussion with retailers, and why there will be further discussions led by ministers as well.

Coffey continues to blame unseasonal weather overseas for the shortages, saying “even if we can’t control the weather”, it is important to ensure supplies are not frustrated in the way they have been by “these unusual weather incidents”.

Conservative MP Desmond Swayne jokes that if he’d known that voting for Brexit would cause frost in Morocco, he could have made a different decision.

[reminder, former Sainsbury’s CEO Justin King warned this morning that UK farming had been significantly disrupted by the exit from the European Union].

Thérèse Coffey, DEFRA Secretary of State, is now answering an urgent question on the UK’s food shortages.

Coffey tells MPs that the UK has a “highly resilient food supply chain”, as demonstrated in Covid-19, and well equipt to handle disruption.

She says seasonal weather problems in Spain and North Africa have hampered production and harvest, leading to the shortages of a “small number” of fruit and vegetables items.

But, she says, the industry shuold be able to mitigage supply problems though alternative sources.

Coffey says Ireland and other parts of Europe are facing very similar supply issues too, adding:

I wish to reiterate that food security does remain resilient, and we continue to expect industry to be able to mitigage supply problems through alternative sourcing options.

Coffey reiterates that farming minister Mark Spencer will meet with retailers next week, to discuss their contractual models, plans to return to normal supplies, and their contengency plans to deal with supply chain problems.

Farmers and growers around the world have faced “significant pressures” due to the Ukraine war and avian flu, and the energy price shock, Coffey continues.

Shadow DEFRA secretary of state, Jim McMahon, is not impressed, saying the minister’s statement is “completely detatched” from the reality being faced on the ground.

Responding to Coffey, he says there is public concern about the availability of food, and dismisses the suggestion that the problem is all down “exernal forces “.

McMahon says he met farmers in Lancashire who are trying to recover from avian flu, who told him there isn’t any DEFRA scheme to help them restart.

There have been a billion fewer eggs on the shelves in the last year than before the pandemic, McMahon says, adding:

We literally had Pancake Day this week, and you couldn’t buy eggs to make your pancakes.

“Indifference and dithering” by government is threatening food security, McMahon warns, who also pointed out that food security is an issue of national security.

The government has been urged to hold a COBRA meeting to address food shortages, as it emerged the farming minister is not meeting supermarkets until next week (see earlier post).

When asked in parliament today how she is responding to empty shelves in supermarkets, environment secretary Therese Coffey said:

“Defra is working very closely with the industry to understand the issues with the supply chain, there have been particular issues in Spain and North Africa before Christmas and shortly after, and indeed officials are already working with food retailers and the minister will be meeting them early next week specifically to talk through certain actions for supermarkets.”

MPs have said this is not good enough. Liberal Democrat Cabinet Office Spokesperson Christine Jardine said:

“People are rightly alarmed about the chronic shortage of fruit and vegetables in our shops, but it seems the government has no urgent plan to fix it.

“This government has created chaos in the economy, an NHS on its knees, now they’re responsible for worsening food shortages through their failure to back British farming.

“We need an urgent COBRA meeting, together with food experts, supermarkets and farmers, to hammer out an urgent solution to this crisis.

“Ministers cannot just sit on their hands while food supply chains across the country grind to a halt.”

One in four UK firms plan to hike their prices next month, as they continue to pass on rising costs to consumers.

The Office for National Statistics’s latest realtime data found that a quarter of trading businesses expect to raise the prices of goods or services they sell in March 2023.

Energy prices remain the top reason these businesses are considering doing so, with 35% reporting this, the ONS says.

That may concern Bank of England policymakers, and chimes with Catherine Mann’s warning this morning about inflationary pressures building.

The ONS also found that last month, 29% of trading businesses reported lower turnover compared with December 2022, while only 16% reported that their turnover was higher.

Newsflash: A Bank of England policymaker is warning that more interest rate increases are needed to tackle inflation.

Catherine Mann, one of the more hawkish members of the Bank’s Monetary Policy Committee, says she believes that “more tightening is needed”, and cautions that “a pivot” on monetary policy is not imminent.

In a speech to Resolution Foundation this morning, Mann is arguing that financial conditions that are now looser than will be needed to prevent inflation becoming embedded in wages and prices.

Mann says she is worried that this could lead to “extended persistence of inflation into this year and the next.”

Mann is one of the seven MPC policymakers who voted to raise UK interest rates to 4% this month, from 3.5% (the other two voted for no change).

In December, Manne was a lone voice calling for a 75 basis point increase, when the MPC also lifted rates by half a percent, from 3% to 3.5%.

Today, Mann explains that failing to tackle the cost of living crisis now will mean inflation will remain higher for longer.

We have an inflation remit, and we will achieve it one way or another.

Failing to do enough now risks the worst of both worlds – the higher inflation and lower activity of the ‘purple’ regime – as monetary policy will have to stay tighter for longer to ensure that inflation returns sustainably back to the 2% target.

The MPC meets to set interest rates next month, when the money markets anticipate a quarter-point rate rise, to 4.25%.

Analyst: Food shortages due to ‘abject policy failure’

Sarah Butler

The UK food system has been hindered by “abject policy failure and inept policy implementation” by the government, according to one leading retail analyst.

Clive Black, an analyst at Shore Capital, writes that shortages of salad in UK supermarkets come after Defra did “pretty much nothing” to help growers when costs for British glasshouses producing tomatoes, cucumbers and other delicate crops surged in the light of the war in Ukraine.

As explained earlier, ex-Sainsbury’s chief Justin King also warned that domestic production had been hit by the lack of help on energy costs.

Black said that problems with pork and egg production have also been allowed to gather pace, as the “advisory context” in which Defra operates is “not up to scratch”.

In a note published today, Black writes:

“The treatment of the food sector is not acceptable, it is time for necessary change… big change,”

He argues that the “security shots across the bows” of the Ukraine war and Avian Influenza “have not been recognised by a complacent and incapable Defra.”