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The Guardian - UK
The Guardian - UK
Business
Sarah Butler

Kingsmill owner warns of price rises due to ‘very small’ expected harvests in UK

A field of wheat being harvested with a combine harvester
Record rainfall has meant farmers in many parts of the UK have been unable to plant crops such as potatoes, wheat and vegetables. Photograph: Graeme Robertson/The Guardian

One of the UK’s biggest bread makers has warned of potentially higher prices as it expects “very small” grain harvests in the UK, making the company more reliant on imports.

George Weston, the head of Associated British Foods (ABF), which owns Kingsmill and Ryvita as well as Twinings tea, Dorset Cereals and the cut-price fashion retailer Primark, said the group had not increased its food prices in the past six months after a hefty period of inflation last year.

However, he added: “One to watch out for is UK cereal. The harvest in July and August may be very small and we may be importing quite a lot of grain to the UK and that will come at a cost.”

He said the rise in cost of UK grains such as wheat might be offset by larger harvests elsewhere in the world but that was not yet clear.

“We are not planning to put prices up at this stage but commodities and other input costs may go up more than we anticipate,” he said. “The situation, if not benign, is more settled than it’s been for a while.”

Record rainfall has meant farmers in many parts of the UK have been unable to plant crops such as potatoes, wheat and vegetables during the key spring season. Many winter and spring crops that have been planted, including oilseed rape, are of poor quality, with some rotting in the ground.

Weston’s comments came as MPs warned of a “perfect storm brewing” on cooking oil. Prices are expected to rise due to the drop in production of oilseed rape in the UK, which has come alongside poor harvests in southern Europe and the continuing effect of war on sunflower crops in Ukraine.

Robert Goodwill, chair of the environment, food and rural affairs select committee, told a hearing on Tuesday: “A perfect storm is brewing on vegetable oil and oil supplies.”

He warned many were predicting that oilseed rape production could “disappear from our fields”.

UK yields of oilseed rape, which is used to make domestic and commercial cooking oil, are projected to be as much as 38% lower this year compared with 2023 and as much as 54% down on the average yield since 2015, according to analysis from the Energy and Climate Intelligence Unit.

Weston also said he was not expecting prices to drop on clothing, despite a drop in the cost of core materials such as cotton as well as shipping fees and production costs. Weston said higher costs of labour in the UK, where the minimum legal wage rose this month, and issues such as business rates were offsetting savings elsewhere.

The company is also rebuilding its profit margins after a slide in recent years, when costs rose and it kept prices down during the cost of living crisis and the pandemic.

Weston said margins had returned to pre-Covid levels and added that Primark would “remain the most competitive retailer” in the fashion market.

He made the comment as ABF revealed a 37% rise in pre-tax profits to £881m in the six months to 2 March as sales rose 2% to £9.7bn.

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