UK Food Producers Warn of 'Ticking Timebomb' as Energy Charges Soar
On a blustery February day in Kent, the conditions are far from ideal for cultivating tomatoes, cucumbers, and peppers. Yet, inside the vast glasshouses of Thanet Earth, the climate is meticulously controlled to a humid 20°C, perfect for the regimented rows of pepper plants emerging from raised trays. This year-round indoor farming in southern England demands substantial energy for light, warmth, and carbon dioxide. However, the sector faces a severe threat as a significant increase in electricity standing charges takes effect on 1 April.
'Eye-Watering Numbers' Threaten Competitiveness
Rob James, technical director at Thanet Earth, which supplies major UK supermarket chains, describes the situation as a 'ticking timebomb'. The company estimates the rise will add £900,000 annually to its energy bill, equating to a 5% increase in tomato production costs. By 2028, further hikes could push this to £1.6 million in extra yearly expenses.
'These big charges really impact our profitability, our ability to compete, and our ability to reinvest,' James emphasises. Growers across the protected horticulture sector warn they cannot absorb a 60% surge in standing charges, let alone anticipated future increases. This pressure may force price hikes or production halts, exacerbating food price inflation.
Unfair Charges and Government Inaction
Standing charges are fixed daily costs for accessing the UK's gas and electricity networks, regardless of usage. Post-April, they will continue rising to fund grid upgrades and the transition to low-carbon energy. However, industry bodies argue this system is unfair. Power-hungry industries like steel and chemicals, classified as 'energy intensive users,' receive support exempting them from charge increases, but food producers are excluded.
The British Tomato Growers' Association (BTGA) and the Cucumber and Pepper Growers' Association (CPGA) blame outdated Standard Industrial Classification (SIC) codes that categorise businesses. Growers are not considered manufacturers, locking them out of support schemes despite operating with similar energy intensity. Simon Conway, chair of the BTGA, states, 'These are eye-watering numbers for these individual businesses and they can’t absorb it. The costs will have to go into food inflation.'
Broader Challenges and Global Vulnerabilities
Soaring energy bills compound existing challenges for growers, including labour shortages, poor weather, and post-Brexit subsidy changes. At a time of rising costs and falling wholesale prices, farmers are gathering at the National Farmers' Union (NFU) conference in Birmingham. Conway and others have alerted ministers and Ofgem about impacts on domestic fresh produce production, highlighting vulnerabilities from volatile weather and geopolitical tensions.
British retailers often rely on imports from Spain, Morocco, or the Netherlands during colder months. Recent devastating storms and flooding in Spain and Morocco have disrupted crops, exposing fragile global supply chains. Despite Keir Starmer's acknowledgment that 'food security is national security,' many growers feel the government lacks urgency.
Investment and Future Prospects at Risk
Thanet Earth, the UK's largest glasshouse complex spanning 51.5 hectares, produces hundreds of millions of crops annually. It recently completed a £25 million seventh glasshouse but has paused plans for two more due to uncertainty. James notes, 'It’s frustrating to make a £25m investment and then face higher costs. Plans to grow further have now been called into doubt.' He fears British growers will be disadvantaged compared to Dutch counterparts.
Ironically, Thanet Earth is a net energy exporter, generating enough electricity to power 35,000 homes. The company employs 260 people, with up to 900 during peak seasons, and reported a pre-tax profit of nearly £3 million on sales of £164 million in the latest accounts. Growers accept the need to fund grid upgrades but warn costs are overwhelming, even for renewable energy investors.
Government Response and Industry Calls
A government spokesperson stated that fruit and vegetable growers play a key role in economic growth, with horticulture supported as a priority sector. They added that energy infrastructure investment aims to boost renewables, end fossil fuel reliance, and reduce bills. The government has committed to reviewing the 'British Industry Supercharger' scheme this year to ensure support targets the most energy-intensive sectors.
James concludes, 'We are not after subsidy or money, just relief from the charges.' As the April deadline looms, the industry urges intervention to safeguard competitiveness and prevent further consumer price rises.
