A farming union has warned of a 'very, very serious' situation

Sign up to our free email alerts for the top money stories sent straight to your e-mail

Our supermarket bills have been increasing and there are fears that soaring fuel, fertiliser, and gas prices will see them go even higher in the coming weeks.

Sara Jones of the Welsh Retail Consortium has warned that a combination of factors mean that it is likely "prices will continue to rise for consumers". She added: “Rising fuel prices are putting further pressure on retail supply chains, pushing up the cost of shipping, heavy goods transport, and final mile delivery. This adds to existing cost pressures from labour shortages, commodity price increases, and rising energy prices. Until some of these cost pressures in the system ease it is likely that prices will continue to rise for consumers.”

Meanwhile National Farmers Union (NFU) Cymru president Aled Jones says that farmers continue to face "extreme inflationary pressure in their businesses". He added: "That is as a result of input costs rising at record levels, an ongoing shortage of labour in the UK food supply chain or, indeed, the impact of the escalating geopolitical pressures around the world.

Read more:25 simple ways you can save money in 2022

“Food price inflation is a concern for us all. We want to ensure that high-quality sustainably-produced Welsh and British produce is available at all price points. We need the whole supply chain to work together to ensure that all parts of the chain are able to receive a return on their investment whilst ensuring that food remains affordable to all.

"Government also needs to consider how, through future support policies, it can help to underpin the continued production of high-quality sustainably produced affordable food for all in society.”

We take a look at how the costs are affecting different Welsh businesses.

Fuel has increased because the wholesale price for crude oil used in manufacturing petrol and diesel has increased following Russia's invasion of Ukraine. This week forecourts have seen record highs.

Major Welsh food distributor Castell Howell, which has a fleet of 150 vehicles, has seen its fuel bill rise by 30% in January and is expecting to have to spend £2m on diesel over the course of a year.

The finance director of the Carmarthenshire-based business, Nigel Williams, told the BBC this week: "What we're seeing over the last month has been an increase of around 30% in the prices we pay and, over the past year, an increase of around 60%. So that represents an increase on an annualised basis around £700,000."

If price rises are sustained the company faces an annual fuel cost "increasing to closer to £2m," which he said posed "a significant challenge" for the business.

"We are taking it for granted that we're going to have to address this ourselves by being as efficient as possible, passing as much of the price increases on, so that we're not left with incurring losses ourselves. I understand the difficulty that presents to customers who are facing similar challenges and, I think, ultimately, the end user will have to pay more for products."

Ceredigion MP Ben Lake told the Commons that one of his constituents had been quoted £930 for a tonne of fertiliser – an amount that would have cost around £280 this time last year. The NFU's Mr Jones said the cost of nitrogen fertiliser has risen by 200% over the past year and in the last fortnight with gas prices having increased further the problem has been exacerbated.

He said: "We are aware that some fertiliser price lists have been withdrawn with the likelihood of issues on price and availability persisting into 2023. These nutrients are key to helping ensure that farmers can optimise their crop yields."

The boss of one of the world's biggest fertiliser companies warned this week that the war in Ukraine will deliver a shock to the global supply and cost of food. Fertiliser prices were already high due to soaring wholesale gas prices but Yara's boss Svein Tore Holsether has warned the situation could get even tougher.

"Things are changing by the hour," he told the BBC. "We were already in a difficult situation before the war... and now it's additional disruption to the supply chains and we're getting close to the most important part of this season for the northern hemisphere where a lot of fertiliser needs to move on and that will quite likely be impacted."

Welsh Plaid Cymru MP Mr Lake told the Commons: "The huge surge in fertiliser prices has made business planning and nutrient-management a financial nightmare for farmers and growers. UK Government must do more to address this crisis and to ensure that our food security is not undermined. I have been told by one farmer of a quote for £930 a tonne, plus VAT, for a shipment that last year would have cost £280."

UK environment, food, and rural affairs secretary George Eustice replied that fertiliser prices had "spiked" even before the current events in Ukraine because the cost of ammonium nitrate is heavily dependent on the cost of gas. He said the government had been working closely with domestic producers in the UK and that a working group had been set up to with the industry to work on the challenge and to identify better long-term solutions that are less reliant on gas.

The cost of animal feed has risen by 60% over the past two years. The NFU Cymru president said the cost and availability of feed raw materials having become even more of an issue as a result of the events in Ukraine and it appears that these high costs will be with us for some time to come.

And British pig farmers have warned the industry could collapse as feed prices rise sharply. The National Pig Association (NPA) says costs have risen 50% in a week and has urged retailers to pay more for pork. UK Government farming minister Victoria Prentis said: "I have already announced an immediate review of fairness in pig industry supply chains and work is under way." She added: "This builds on schemes we have introduced to help clear the backlog of pigs, a temporary visa scheme for pork butchers, and conversations with the major banks and retailers to ensure they are showing flexibility to pig farmers at this difficult time."

The NFU has warned of a "very, very serious situation" as production of certain crops plummets due to rising gas prices. NFU president Minette Batters said:"I think the impact is being felt most harshly, if you like, in the protected crop sectors – so that's aubergines, peppers, cucumbers. We're already seeing massive contraction because, for these businesses, really 50% of their costs are reliant on the price of gas."

Ms Batters said farmers have been "talking about going from 80m cucumbers to 35m, 100m peppers to 15m. The easiest thing with these massive costs – the only thing – is to keep these glasshouses empty. It's a very, very serious situation in that sector and this situation isn't going to go away any time soon so it's about planning the future."

Mr Jones added: “Gas and diesel prices have both seen huge volatility and these increases will impact on food production in many ways. The price of fertiliser is heavily linked to gas prices – it is used to heat glasshouses for fruit and vegetable production and, as diesel price increases, so does the costs associated with the tillage of our crops and the movement of food throughout the supply chain."

To get the latest email updates from WalesOnline straight to your inbox click here.