Bank of England Governor says energy costs and global food prices key at NFU lecture

21 November 2023

Global food prices, energy costs and the link between the two was the main point made by the Governor of the Bank of England, Andrew Bailey, when he addressed the NFU’s Henry Plumb Memorial Lecture.

He said with Russia and Ukraine both being major producers of a number of agricultural commodities, the invasion had reduced global supply and increased uncertainty.

Speaking at the event, 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.”

He spoke about how “farmers were right” when being 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’ve found it hard to find the labour they need.

On recent uncertainty within the global economy, the Governor said: “Poor weather was undoubtedly a factor. 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. 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 and said: “We still have lots to learn from you.”

NFU President Minette Batters said: “It was a great honour to have the Governor speak at this year’s Henry Plumb Memorial Lecture. He joins a great list of prestigious speakers who have passed on their wisdom about topics touching food, farming and the environment.

“It remains an incredibly challenging time for the agriculture sector, and the country as a whole, both economically and politically. As the Governor highlighted, inflation has been one of the biggest issues impacting the agriculture industry, with input costs increasing by 33% over the past four years. Energy and fertiliser have been the key drivers of these costs, which is why we’ve specifically called on the Chancellor ahead of the Autumn Statement to review long-term energy contracts and improve transparency in the market. 

“Food inflation is also continuing to affect many UK households. High food inflation impacts the poorest people and it is vital that government continues to look at opportunities to reduce the causes of this inflation.

“As farmers we want to produce affordable, nutritious and climate friendly food.  Farming is going through a massive transition right now and there’s more uncertainty to come with an election on the horizon. 82% of farmers have said that the phasing out of current farming support payments is negatively impacting their business confidence. To combat this and unlock a thriving food and farming industry, we need to leave behind the ‘embrace’ and ‘abandonment’ cycle of food production. It is for all political parties now to decide whether they want to back British farmers and embrace our domestic food security with policies that value food production.”

More information

  • The NFU’s Henry Plumb Lecture took place on Monday 20th November at the Royal Society.
  • For more information about the NFU’s asks ahead of the Autumn Statement please visit the following