Hayley Campbell-Gibbons: Should the supply chain stress over drought?

Last week the remainder of Norfolk, Suffolk and Essex were declared as being in drought. This means that south-east England and the whole of East Anglia are now in drought, with the focus of concern shifting to the issue of low groundwater resources. With little winter recharge period left for any significant recovery, the magnitude of the drought and its full geographical extent will be heavily influenced by what rain falls over the next eight to 10 weeks.

Speaking to producers around the country about the impact of the drought on crop production has revealed a very mixed picture, with many growers already taking mitigation measures of their own to ensure supply. However, the main concern seems to be the potential market fallout that the media hype about vegetable shortages and increased food prices may bring.

As reported in FPJ last week, several retail customers and packers are increasing their procurement of vegetables from the wetter west of England and Scotland, with growers in these parts of the country being asked to increase production. Yet with promises being made to producers in the wetter parts of the west to grow crops without a commitment to purchase, who is shouldering the risk of retailers hedging their bets? If conditions over the spring and summer deliver enough rainfall for crops in the east of the country to thrive, what will happen to those crops that have been grown in other parts of the country? Those who ‘take the gamble’ could end up with vegetables without a home. This surplus of product could in turn deflate an already depressed market.

Ultimately we all want to ensure that there is enough food on the supermarket shelves to meet consumer demand, but it’s very important that buyers are not swayed by shock stories and are discouraged from making knee-jerk decisions that could have costly consequences for growers further down the line.

So, in a whirlwind tour of the horticulture sector, what is it looking like out there? Brassica growers in Lincolnshire farming on good water-retentive land with no need to irrigate are still predicting quality crops, and aren’t anticipating any cuts to their programmes. Spring showers are by far the most critical concern for these growers, who fear that continued dry soils will make it more costly to prepare seed beds and put further pressure on margins.

By contrast, the production of any vegetable grown on sandy land is likely to be severely affected by poor irrigation or a lack of intermittent showers throughout the season. In Norfolk, a full reservoir is the exception rather than the norm and there are already reports that several potato and root vegetable growers are reducing their planted areas for 2012 because of water issues. There is a prediction that some of the horticultural cropping from this area will move further north and the land turned over to arable production. That said there does appear to be a better dialogue between industry and the Environment Agency this year.

In the West Midlands, there are again variations, but one landowner said that if dry conditions prevail the only areas likely to run short of water would be those abstracting from some smaller tributaries and the upper reaches of the River Avon.

In the South East the issue is unquestionably serious, particularly for tree fruit. Soil moisture levels are very low, meaning that there is very little reserve. The majority of growers do not irrigate top fruit and stonefruit, but even where they have the option to do so it is unlikely to be adequate enough to prevent an impact on fruit quality. Again, many reservoirs are not full and growers are looking for reasonable summer rain. That said, there is no indication at this stage of there being any reductions in plantings or production of soft fruit this season.

Finally, from a glasshouse sector perspective, the drought will have little impact on production, as growers will likely turn to mains supply to supplement their water requirements. However, there will be a significant knock-on impact on costs as a result of these measures being taken, which will squeeze margins on protected crops even further. -