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Sowing the seeds: A blooming English horticultural sector Contents

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Chapter 2: “A perfect storm”

34.In recent years, the horticultural sector has found itself at the eye of a “perfect storm” created by the conflation of multiple domestic and global challenges.61 In 2020, the impacts of EU Exit were compounded by the unexpected onslaught of the COVID-19 pandemic, and in 2022, the war in Ukraine further impacted geopolitical and economic uncertainty. These immediate challenges have placed increasing pressure on the horticultural sector, which was already facing working hard to adapt to and mitigate the impacts of climate change. A range of short and long-term levers will need to be pulled to meet these challenges and safeguard its future.

Input costs

35.Inputs are costs incurred to create a product or service. Growers of both edible and ornamental produce have faced higher input costs in recent years due to market volatility caused by these multiple domestic and global challenges. For example, these events have caused the costs of key inputs, such as energy and fertiliser to rise.62

Energy

36.The annual increases in gas and electricity prices to October 2022 were 129 per cent and 66 per cent respectively.63 The NFU reported to us that cost inflation for farm inputs reached at a record high with energy prices up by 165 per cent .64 Alex Charrington, an apple grower, told us that their energy costs rose by a staggering 1400 per cent between September and October 2022.65

37.In another example, the Lea Valley is a 3450-acre area north of London which grows around 65 per cent of the UK’s cucumbers and peppers. In 2021, 8 per cent of their glasshouses were empty because growers could not afford to heat them. This had not happened in 40 years.66

38.The Government set up support schemes in response to the crisis including the Energy Bills Discount Scheme (EBDS), which ran from April 2023 until March 2024. The Energy and Trade Intensive Industries (ETII) scheme establishes more support for selected industries. However, the list currently excludes the horticultural sector, except botanical gardens.67

39.In May 2023, the Government said that it would assess where Controlled Environment Horticulture (CEH), which typically takes place indoors in conditions where the environment can be manipulated, struggle to find the necessary data to qualify for the scheme.68 To qualify, sectors must be in the top 20 per cent for energy intensity and top 40 per cent for trade intensity. Horticulture does not currently meet this threshold.69

40.Several stakeholders told us that horticulture should be included in the scheme. For example, vertical farms (see Figure 5) and commercial greenhouses provide high yields in a smaller growing space compared to traditional farms, however they are highly energy-intensive and therefore are vulnerable to energy price fluctuations.70 Landseer, a crop protection and horticultural advice company, told us that top fruit growers have invested heavily in state-of-the-art storage units to ensure that apples can be stored at the appropriate temperature (around 0.5C for up to nine months) but that these come at considerable energy cost.71

41.The HTA told us that rising input costs coupled with the exclusion of glasshouse growers from the ETII scheme means that “some glasshouse growers are considering exporting production for the most energy intensive periods of production”, with knock-on impacts on the staff they are able to employ.72 Other growers told us that a lack of confidence in energy security and long-term planning was impacting their investment decisions, which typically take place across high-risk planting cycles over long periods.73

42.Both gas and oil prices have been steadily falling since June 2023, which has alleviated some of the pressure on the sector.74 In the long-term, there is also a clear role for the domestic production of renewable energy to build sector resilience through reducing reliance on gas imports (see Chapter 4). However, in the short term, the Government has committed that CEH will be included amongst other manufacturing sectors in decisions on industrial energy policy.75

43.A conflation of factors such as the war in Ukraine and the longstanding impact of the pandemic on supply chains has demonstrated how vulnerable the UK is to energy price fluctuations. Exacerbated by inflationary pressures, growers in the protected horticulture sector have faced huge increases in energy costs, but it is not recognised as an energy-intensive industry.

44.The Government must recognise horticulture as an energy intensive industry and add it to the list of sectors eligible for the ETII scheme.

Fertiliser

45.The most commonly used fertiliser products are ammonium nitrate (AN), liquid nitrogen (UAN), granular urea, potash and phosphates.76 Both nitrogen-based and non-nitrogen fertiliser are sourced overseas although around 40 per cent of the UK’s fertiliser requirements are met domestically.77 Fertilisers can cause significant environmental damage through leaching and through the release of greenhouse gases into the atmosphere (see Chapter 4).78

46.Between May 2021 and May 2022, the price of UK-produced ammonia nitrate fertiliser in the UK increased by 152 per cent.79 The reasons for this are varied but include an upward pressure on the price of gas, which is required to produce nitrogen-based fertiliser, due to the war in Ukraine. The war also led to higher tariffs and disrupted movement of Russian fertilisers. At the same time, Chinese export controls on fertilisers also impacted supply.80

47.The UK Food Security Report 2021 identified fertiliser supplies as a risk to domestic food production.81 Just one year later, in 2022, one of the UK’s two major producers of fertiliser closed its doors permanently.82 In July 2023, the House of Commons EFRA Committee raised concerns around the impact of the UK’s fragile fertiliser supply and highlighted the lack of information on the steps the Government will take to protect domestic production of fertiliser.83 The UK’s final ammonia plant in Billingham announced that it would permanently shut down the same month.84

48.Minette Batters, President of the NFU, told us that the impact of compounding global and geopolitical challenges has been an increase in fertiliser prices by as much as 40 per cent.85 This increase in fertiliser prices has placed upward pressure on the costs of doing business for growers.86 More recently, fertiliser prices have stabilised somewhat, albeit at higher levels.87

49.The Government’s primary vehicle for liaising with industry on fertiliser price transparency and monitoring is the Fertiliser Industry Taskforce, a partnership between Defra, the NFU, AHDB, the Agricultural Industries Confederation and devolved administrations.88

50.Recent gas price increases have led to spikes in fertiliser prices, particularly for manufactured ammonium nitrate and urea fertilisers, which take a significant amount of energy to produce. There is a pressing need to address this issue in the short term.

51.The Committee agrees with the EFRA Committee that the Government should set out how it will ensure continued fertiliser production in the UK. The Fertiliser Industry Taskforce must make good on its promise to increase transparency in the fertiliser market to help mitigate the effects of price volatility by working closely with industry on a regular basis. In the long term, the Taskforce must take note of our recommendations on R&D with a view to reducing dependence on nitrogen and phosphorous-based fertilisers.

Relationships with supermarkets

52.As well as hitting input costs, inflation has increased the prices consumers pay for food items. In March 2023, food price inflation peaked at 19.2 per cent, the highest annual rate seen for over 45 years. While these figures cannot be directly compared with inflation linked to ornamental produce, the standard Consumer Prices Index (CPI) rose by 7.9 per cent in the 12 months to June 2023.89 As of 18 October 2023, the standard CPI rose by 6.7 per cent in the 12 months to September 2023, while food prices fell for the first time since September 2021.90

53.In the face of rising input costs, some growers have received static returns for their produce. British Apples and Pears Ltd told us that despite a 17 per cent increase in the price of apples being charged to consumers, growers had received just 0.8 per cent increase in returns between 2021 and 2022.91 To put this in context, we were told that apple growers receive approximately 3 pence from a bag of six apples sold for £2.20.92 The British Independent Fruit Growers association told us that “the current situation is so bad for apple growers that many are deciding to grub up orchards rather than plant new ones”.93

54.Supermarkets provide growers with a “slick, efficient and relatively cost-efficient way of presenting and selling” products to the market.94 However, we have also heard that they exert huge pressure over growers, who often feel like “minnows” in the face of behemothic supermarket power in a “savage marketplace”.95

55.Loss-leader pricing strategies, where retailers price-match to the lowest price in the market, are a critical factor in poor grower returns. The NFU told us that the cost-of-living crisis has intensified “retail price wars” in an already competitive market environment.96 British Apples and Pears Ltd warned of a “race to the bottom” on price, arguing that the effective delegation of food policy to the market has resulted in the prioritisation of low prices over food supply and quality.97

56.Retailers and suppliers typically operate on fixed contracts, which growers have told us result in difficulty raising the prices of produce.98 Dr Tim Lacey, Fresh Produce Manager at HL Hutchinson, told us that “since UK retailers seem to operate on a fixed and extremely low margin contract price for fresh produce regardless of market conditions, the price received by growers now bears no relationship to market conditions”. This is resulting in significant risk being taken on by growers and a decline in confidence to invest in horticultural businesses.99

57.We have heard that single-year contracts, often without provision for inflation clauses, result in a lack of certainty for growers who cannot make long-term investments in crops that have lengthy planting cycles.100

58.We attempted to speak to the major supermarkets on this issue of price and supply associated with the horticultural sector given that the combined grocery market share (for all goods) of the four largest food and drink retailers was 64.9 per cent in September 2022. Tesco has the largest market share at 26.9 per cent.101 We were surprised and disappointed that only Tesco was willing to give public evidence to this inquiry with repeated invitations to Sainsbury’s, Morrisons, Asda, Aldi, and Lidl. Morrisons, Waitrose and Asda accepted a separate invitation to speak to the Committee in private (see Appendix 8) and Marks and Spencer submitted written evidence to the inquiry.102 Mark Spencer MP reassured us that Defra meets with supermarkets on a regular basis behind closed doors due to the commercial sensitivities associated with their businesses.103

59.Tesco told the Committee that it has longstanding relationships with its suppliers built on mutual sustainability and an underlying presumption of fairness. Dominic Morrey, Commercial Director for Fresh Food and Commodities at Tesco, told us that dialogue on the length of contracts varies depending on various factors. He said that “it is completely in our mutual interests to ensure that our growers are receiving a fair return”. He did not comment on specific returns to growers but said that “in every pound that Tesco sells, approximately 96 to 97p is cost to run the business and sell the product”, suggesting around 4p in the pound is counted by Tesco as profit.104

60.Mark Spencer MP told us that it should be recognised that “supermarkets and retailers have done a very good job of keeping food on the shelf”, particularly during the pandemic. He warned that “we do not want to drive food inflation in the wrong direction”, noting that consumers want to see the cost of their food basket remaining as low as possible.105 We accept this, however it is only right that, as supported by the Minister, there should be balance in the share of risk, responsibility and reward across all parties in the supply chain in order to maintain business viability and to avoid the subsequent risk that “we will drive out the next generation from our sector”.106

61.Powers contained in the Agriculture Act 2020 enable the Government to introduce statutory codes of contractual practice, which would apply to businesses when purchasing agricultural products directly from farmers.107 Following the Farm to Fork Summit at Downing Street in May 2023, the Government said that “farmers should be paid a fair price for their produce’ and announced that it would launch a new review of the supply chain for the horticulture sector.108 Mark Spencer MP told us “there is some evidence that there has been an imbalance of power and that’s what I want to address in these investigations”, adding that work on the review would start in October and it would likely focus on food produce only.109 This follows reviews into the dairy and pig sectors, which the Minister told us would “have repercussions across the whole sector” when published.110 The Government intends to introduce the legislation following this review later this year, with regulations for the pig sector forthcoming.111

62.Loss-leader strategies, price-matching to the lowest bidder and the perceived imperative to offer low prices to consumers at the expense of grower returns is squeezing the UK horticultural sector out in favour of cheaper imports. Despite the need for affordable food, particularly during a cost-of-living crisis, supermarket activity is fundamentally damaging food security in the UK by further increasing our reliance on cheap overseas imports and putting UK growers out of business. The Government’s review of fairness in the horticultural supply chain is welcome.

63.The Government must conduct and publish its review of fairness in the horticultural supply chain as soon as possible and include ornamentals within its scope.

The Groceries Code Adjudicator

64.The Groceries Code Adjudicator (GCA) is responsible for regulating the relationships between the UK’s largest grocery retailers and their direct suppliers by encouraging, monitoring and enforcing compliance with the Groceries Supply Code of Practice (‘the Code’).112 The GCA is supported by a small team of just seven staff, although the Competition and Markets Authority (CMA) has recently agreed to work with it on recruitment and access to professional expertise.113

65.The Code was intended to protect suppliers from being treated unfairly by supermarkets. The CMA determines which retailers come under the Code, reviewing the market and designating any retailer which meets the annual turnover threshold. GSCOP only applies to ‘Designated Retailers’, which are Aldi, Amazon, Asda, B&M, Co-operative, Iceland, Sainsbury’s, Lidl, Marks and Spencer, Ocado, Tesco, Home Bargains, Waitrose and Morrisons.114

66.We were told by the GCA, Mark White, that in light of inflationary pressures, the retailers’ refusal to consider a cost-price increase, or delays in responding to a request for a cost-price increase or agreeing to implement an agreed cost-price increase, became the most reported issue in the survey across the five years to 2022. Mr White told us that growers were reducing the amount of crop they were planting and considering whether to heat greenhouses at all given increased costs. He expressed concern at “the increased level of insolvencies across the economy brought about by those input cost pressures.”115

67.In February 2022, the GCA launched ‘7 Golden Rules’ for handling requests for cost price increases in the context of rising inflation. These included clearer communication about the length of the process and outcomes, greater support for buyers, and only asking for specific information from suppliers needed to make a CPI decision.116 The NFU called on the Government to “renew and refresh” the Code to embed these rules more tightly.117

68.In its latest survey for 2023, the GCA found that suppliers felt that retailers had increased their Code compliance, with the average compliance score across the 14 retailers at 92 per cent.118 Since its inception in 2013, we heard that the GCA has improved relationships between suppliers and retailers, however “growers still feel vulnerable to supermarket power”.119

69.Mark White told the Committee that retailers could do more to work with their buyers so that they can better understand the challenges and demands facing growers. The GCA has encouraged retailers to keep buyers in post for longer periods of time (two years minimum) “so that they can really get to understand the challenges and demands on the growers”.120

70.The NFU told us that the GCA’s role was too limited to provide protection for primary producers downstream of the direct supplier, calling for the regulator to be given “serious teeth”, a view shared by several growers who gave evidence.121 Richard Stogdon told us that the GCA lacked sufficient powers to properly regulate the conduct and behaviours of retailers, while David Knight wrote that the GCA’s role was “active but limited”.122

71.Mark White told us that he recognised an expanded scope with oversight of the wider supply chain would be welcomed by some primary producers, although he highlighted existing work in this area. He raised challenges linked to differences in commercial strategies and warned that the GCA’s powers and limited resources may not be adequate to deliver on an enlarged mandate.123

72.The GCA is effective and improving compliance with the GSCOP Code. We recognise that it does the best it can with the limited resources provided to it by Government, but the GCA’s role is too limited to stand up for growers effectively.

73.The GSCOP code must be refreshed to embed the 7 Golden Rules identified by the GCA. The CMA must review the scope and remit of the GCA to examine whether the powers the GCA has are appropriate for a wider scope and if they should be increased to address broader supply chain relationships, including processors and wholesale purchasers. Ornamentals should be included as part of the horticultural sector supplying to retailers.

Trade

74.The UK relies significantly on international trade both for imports of fresh fruit and vegetables and ornamental plants and plant products, and for exports. The UK’s exit from the EU in 2020 has caused significant disruption for horticultural importers and exporters. The concurrence of this transition with the COVID-19 pandemic means that horticultural businesses have been forced to grapple with significant uncertainty in a complex trading environment.

The UK’s reliance on trade

75.Consumers in the UK typically demand access to fresh produce all year round, including tropical and out-of-season produce. This is particularly true of fresh fruit and means that it has to be sourced overseas from countries with more suitable climates.124 As a result, the UK is highly reliant on trade for its fresh fruit and vegetables.

76.Dr Hannah Pitt from the University of Cardiff and Dr Lydia Medland from the University of Bristol told us that there is a longstanding reliance on imports in UK horticulture, dating back decades and in some cases, centuries. One driver for this is the availability of cheaper labour overseas. Dr Medland’s research found that a UK farm worker would be expected to earn around £70.70 for a seven-hour day, while in Morocco a worker growing tomatoes would earn around £5.50 per day. Such high dependency on overseas production presents a risk to food security, particularly when coupled with challenges facing growers at present that are leading some to leave the market, resulting in further declines in UK production, and further investment overseas.125

77.The UK also relies heavily on imports for supply of ornamental plants. The value of imports in this category was £1.5 billion in 2022, a 22 per cent increase on 2021. Exports of ornamentals were worth £49 million in 2022, a 12 per cent decrease since 2021.126 The HTA told us that 96 per cent of its members import plant products in order to operate.127 We were told that reasons for this include a lack of skills and investment in the UK nursery sector.128 In 2021, the three largest value imported commodity groups (at 2021 prices) were fruit and vegetables, meat and beverages.129

Figure 3: Origins of fresh fruit and vegetables in UK domestic consumption, 2022

Source: Defra, Food statistics in your pocket, (updated 20 October 2023): https://www.gov.uk/government/statistics/food-statistics-pocketbook/food-statistics-in-your-pocket [accessed 23 October 2023]

78.The latest figures for the horticultural sector were published in June 2023. In 2022, the UK imported vegetables at a value of £2.7 billion, a 15 per cent increase on 2021. The top countries by imports were Spain, the Netherlands, France, Morocco and Kenya. Vegetable exports were worth £85 million, 17 per cent higher than in 2021. Fruit imports cost £3.9 billion in 2022, a 4.5 per cent increase on 2021. Exports were worth £64 million, a 2.3 per cent increase. By country, imports were highest from Spain, South Africa, Peru, France and the Netherlands. Exports were highest to Ireland, the Netherlands, Hong Kong, Germany and the UAE.130

79.The overall figures mask significant variations on a crop-by-crop basis. For example, the UK is essentially self-sufficient in root vegetables and cabbage, but produces a smaller proportion of cauliflowers, broccoli, lettuce, mushrooms and tomatoes than it did in 1990.131

80.Trade in fresh produce has been hit by knocks to global supply chains caused by the pandemic, EU Exit and the war in Ukraine. Combined with the UK’s retailer-supplier model and the impact of climate change and extreme weather in regions from which the UK typically imports, such as North Africa, this culminated in a shortage of fruits and vegetables on shelves at retailers around the country in early 2023.132 In light of heatwaves and wildfires attributed to climate change in the Mediterranean in the summer of 2023, this trend may continue and threaten food security further, potentially causing the cost of fresh fruit and vegetables to rise.133 The West Sussex Growers Association told us that “in light of recent global events, the argument for greater self-sufficiency has probably never been stronger”.134

81.The Food Foundation told us that UK market share of crops such as apples, broccoli, cauliflower cherries, courgettes, cucumbers, garlic, lettuce, mushrooms, onions, pears, peppers, spinach, spring onions, sweetcorn and tomatoes could be increased if there was greater investment in the sector to ease it to become more competitive and if labour supply was secure. Such investments might go into protected horticulture, such as glasshouse infrastructure.135

82.Investment in technology may also present a solution to shortage of workers. Tim Mordan told us that automatic harvesting of strawberries could resolve labour challenges that limit productivity. He told us that crop protection and automatic harvesting has enabled UK production from March to November, contributing to self-sufficiency during this period.136

83.Other technologies may also increase the length of the UK growing season. Jack Ward, CEO at the British Growers Association, told us that technology could support an increase in domestic production of protected edibles and out of season produce with improvements in storage techniques, for example.137

84.Under the Agriculture Act 2020, the Government is required to present a report on food security to Parliament at least once every three years. The latest report was published in 2021 and the next will be published towards the end of 2024.138 In July 2023, the EFRA Committee recommended that a fully updated edition of the UK Food Security Report should be published on an annual basis. The Committee also recommended that the Government should develop a suite of food security indicators and set targets against these.139

85.This has been promised before. In August 2022 following a leadership hustings event, the now Prime Minister Rishi Sunak wrote to the NFU, committing to establish a new food security target, including a statutory duty to monitor and report on domestic food production levels annually.140 Minette Batters told us that this measure was the “single thing that could make a difference right now” in shoring up food security.141

86.The Government set out plans to boost exports following its ‘Farm to Fork’ summit at Downing Street in May 2023 through a new framework for trade negotiations and prioritisation of new export opportunities. It will also invest £2 million to boost global trade shows, provide £1.6 million funding for the GREAT food and drink campaign, and introduce five additional agri-food and drink attaches.142

87.Mark Spencer MP highlighted the challenges of seasonality and told us there was scope to help producers become more competitive. However, he suggested that it is “important to make sure that we get the balance right between UK domestic production and the import of food”, noting that it was important not to confuse an increase in food production with greater food security, which sometimes relies on secure trading relationships to meet deficits in UK production due to, for example, a poor UK harvest or disease outbreak.143

88.Furthermore, the Minister raised World Trade Organisation (WTO) rules as a barrier to legislating to prioritise UK produce.144 WTO rules seek to prioritise fair competition and stipulate that imported and locally-produced goods should be treated equally after foreign goods have entered the market. Under the principle of predictability, the system discourages setting limits on quantities of imports.145

89.The UK is far from being self-sufficient in fruits and vegetables, and this has become worse in recent years. The Prime Minister has promised to boost domestic food production, but has so far failed to do so. There is considerable scope for halting and reversing the decline in food security if the Government set new policies and targets to do so.

90.We recommend in common with the EFRA Committee’s recent recommendation that the Government should develop a suite of key food security indicators—from farm inputs and retailer outputs—to monitor and ensure food security and report annually as committed to by the Prime Minister. In addition, the Government must, as a priority, define targets for food self-sufficiency and set itself statutory reporting duties against those targets together with key food security indicators. Defra should, as a matter of urgency, reconsider its interpretation of international rules and consider barriers to promoting British food.

Buying British

91.Over the last thirty years, consumer preferences have shifted away from seasonal British produce towards year-round supply of out-of-season fruit and veg. 146 Dominic Morrey told us that Tesco’s customers “have come to expect full shelves pretty much 52 weeks in a year”.147 In 2022, domestic production contributed just 17 per cent of the total UK supply of fruit and 55 per cent of the supply of vegetables.148

92.Supermarkets are therefore reliant upon imports.149 The Food Foundation told us that these global supply chains are highly vulnerable to climate risks and water stress.150 In effect, this means that by demanding year-round access to more out of season produce, the UK is exporting environmental damage overseas while we fail to take advantage of the capacity to produce more high-quality horticultural produce at home.

93.Tesco told us that customers are alert to what is locally sourced. Its approach, wherever possible, is to grow and source products in the UK if they can be grown sustainably from an environmental and economic standpoint.151 Tesco told us that it would follow up with figures on this balance, however this information was not provided.

94.We have heard that more could be done to motivate consumers to buy predominantly seasonal produce from the UK.152 Contrary to Tesco’s belief, campaign group Veg Power highlighted research showing that consumers have a limited understanding of the seasonality of UK vegetables or link environmental concerns with grocery shopping habits. Eighty per cent of respondents to a YouGov and Veg Power survey in 2021 said that they would like supermarkets to do more to promote seasonal produce.153 Researcher Rosalie Maunder from Khepera CIC and Empower to Cook CIC suggested that this could take the form of stricter labelling on imported produce and clearer British produce marketing.154

95.The prescriptive nature of standards set by supermarkets is hampering the sale of British produce. Professor Rebecca Cassidy from Goldsmiths, University of London, told us that they apply “rigid standards on growers, and are easily able to substitute imported crops where they feel these standards have not been met”.155 OxCAN told us about top fruit growers producing smaller apples due to drought conditions, resulting in over 30 per cent of their crop being discarded due to stringent supermarket specifications.156 Sustain warned that prolonged drought is likely to impact the sale of British crops longer-term and increase food waste. It suggested that supermarkets should be more flexible on product specification for food that is perfectly edible and allow for different shapes, sizes, and looks of fresh produce”.157

96.Comparable self-sufficiency data on ornamental plants is not included in Defra’s annual horticulture statistics. The value of ornamental imports was £1.5 billion in 2022, a 22 per cent increase.158 Just as globally produced fruits and vegetables are expected year-round, so too are non-native and/or tropical houseplants. Jo Lambell, Founder of online retailers Beards and Daisies, told us about the impact of recent inflationary pressures on energy costs to store tropical houseplants in the UK, noting that while the business is seeking to move to more UK-grown products, 95 per cent of its plants are currently imported.159 George Hillier, Director of Property at Hillier Nurseries told us that “a UK-grown plant planted in the UK will do better because that is much more like the environment it was grown in”.160

97.Mark Spencer MP told us that we “need to think about our choices as consumers”, suggesting the days of buying out of season strawberries are “behind us”. However, he said that he defended the right of consumers to make their own choices about what they buy and felt “blessed” to have a retail sector that enables this.161 Regarding ornamentals, he emphasised that “we have always imported plants”, while highlighting the trend towards buying more UK produce, particularly wedding flowers. He told us: “I certainly hope that we are seeing more thought from our consumers about where they buy their flowers and the impact that that has on the climate”.162

98.Following his appearance before the Committee in September 2023, Defra backed calls for industry-led action to signpost customers to buy British when they shop online and will support campaigns to endorse the taste and quality of home-grown meat and dairy products, although it did not mention horticulture as part of this. The Government also confirmed that ELMS can be used to help to meet public procurement standards.163 In addition, the Government says it is backing industry-led action to signpost customers to buy British produce when they shop online.164

99.Supermarkets should do more to promote environmentally friendly actions through encouraging consumers to buy British produce and to increase consumer awareness of seasonality.

100.The Government should work with industry to launch a campaign to define what is unique and special about British produce and encourage consumers to buy more seasonal British produce.

Biosecurity

101.Sandy Shepherd, Managing Director at Ball Colegrave, told us that biosecurity is “the fundamental thing that we worry about in our business”.165

102.Biosecurity refers to precautions that aim to prevent the introduction and spread of harmful organisms, including non-native pests and diseases such as insects, disease-causing organisms (pathogens) like bacteria and fungi.166 Pests and pathogens spread via the movement of live plants or plant products, timber and wood packaging, dirty tools, and soil and leaf litter, but some airborne pests and pathogens can naturally cross the Channel from Europe. Furthermore, warmer weather due to climate change is assisting the establishment of invasive species and pests in the UK (see Chapter 4).167 See Box 1 for further detail on invasive non-native species.

Box 1: Invasive non-native species (INNS)

It is important to differentiate between invasive non-native species (INNS) and non-native species (NNS). There are currently around 2,000 NNS in Britain and around 10-12 new species establish themselves every year. NNS are a species intentionally or unintentionally introduced outside its native range by human actions. INNS are one of the top five drivers of biodiversity loss around the world. INNS are any non-native animal or plant that spread causing damage to the environment, economy, human health or the way we live. Climate change may increase the presence of INNS due to their ability to succeed in stressed habitats and those altered by changed climatic conditions. In February 2023, the Government published its INNS Strategy. It recognises that INNS “threaten our biodiversity, our ecosystems, and our economy”, costing £1.84 billion per year. The strategy sets out measures to reduce establishments of non-native species by at least 50 per cent compared to 2000 levels. Specific actions include: Increased capacity for inspections at the border and post-border; Further assessment of the most high-risk routes and mechanisms for the introduction and spread of Invasive Non-Native Species; and Further improvements to rapid response systems. We heard significant concern about INNS arriving through the international trade in pot plants. Buglife told us that “the introduction of INNS to ecosystems typically leads to a reduction in species richness and abundance and the degradation of the environment”. Buglife warned that species such as the New Zealand flatworm and Spanish slug can harm native wildlife, garden plants and crops.168

Source: Defra, The Great Britain Invasive Non-Native Species Strategy 2023 to 2030 (February 2023): https://www.nonnativespecies.org/assets/Uploads/The-Great-Britain-Invasive-Non-Native-Species-Strategy-2023-to-2030-v2.pdf [accessed 18 October 2023]; Defra, New strategy launched to protect biodiversity and economy from non-native species (27 February 2023): https://www.gov.uk/government/news/new-strategy-launched-to-protect-biodiversity-and-economy-from-non-native-species [accessed 18 October 2023]

103.Jennifer Pheasey, Director of Public Affairs at the HTA, told us that “whenever you move any good across a border, particularly if it is a sanitary or phytosanitary good, it inherently has some sort of risk attached”.169 The HTA outlined its vision for biosecurity as follows:

“As no SPS agreement has been reached with the EU, a phytosanitary certificate must be used to import plants from the EU, pre-notification of all plants for planting made before importing them and a system of import inspections employed at the border. A system of border control that uses smarter risking of imports, makes best use of technology, and allows those businesses exhibiting the highest levels of biosecurity to be rewarded needs to be employed”.170

104.Phytosanitary certificates prove that plants have been inspected and are free from pests and diseases. They govern movements between third countries and are issued by the Plant Health Authority. They differ from plant passports, which regulate plants and plant products moving within Great Britain.171

105.The Government has produced a range of strategies to tackle plant health and biosecurity following EU Exit. The January 2023 Plant Biosecurity Strategy for Great Britain 2023 to 2028 sets out how Defra, the Forestry Commission and devolved governments will collaborate to protect plant biosecurity, including trees and plant products (vegetables, fruits, wood packaging material and cut flowers). Measures include:

• Expanding the Animal and Plant Health Agency’s (APHA) Internet Trading Unit to boost monitoring of online retailers and social media for trade in high-risk plant products;
• The Public Engagement in Plant Health Accord, signed by 30 organisations, which pledges to engage with the public and promote positive behavioural change in relation to plant health;
• Implementing new plant health IT systems to enhance the UK Plant Health Risk Register and boost preparedness; and
• Working with the UK Plant Health Alliance to develop a new five-year roadmap for the Plant Healthy scheme that provides biosecurity certification to businesses.172

106.In addition, the June 2023 International Action Plan for Plant Health builds on these ambitions and laid out the Plant Health Service’s ambitions. The Plant Health Service is made up of the four UK governments and bodies including APHA and the Forestry Commission. Its five key goals are:

• Global pest monitoring
• International standards and guidance
• Implementation, capacity development and market access
• Research and development (R&D)
• International engagement.173

107.The Government’s latest proposals for ensuring biosecurity at the border are outlined in the recent publication of the Border Target Operating Model (BTOM) (see para 122).

108.Furthermore, the Government says that it has worked collaboratively with devolved administrations, government bodies and non-government stakeholders to develop such strategies, recognising that “the Government cannot act alone and that we all have a collective responsibility to work together to protect our plants and trees”.174

109.For example, Royal Botanic Gardens Kew, which is an arms-length body of Defra, operates a Plant Quarantine Unit, where experts provide support, expertise and training to the UK Border Force, APHA and other government border agencies regarding biosecurity risks associated with confiscated shipments of plants, seeds, and products. It is a signatory to Defra’s Public Engagement in Plant Health Accord and launched a Kew Science Plant Health and Adaptation research team in 2016, in close partnership with Defra.175

110.Despite this, the Woodland Trust told us that it does not agree that the UK’s biosecurity regime is “world class”, suggesting that measures do not go far enough to prevent the arrival of future plant health epidemics.176 One such threat is Xylella (see Box 2).

Box 2: Xylella fastidiosa

Xylella fastidiosa (Xylella) is a bacterial disease with many sub species and strains not known to occur in the UK. It is spread by insects that feed on the fluid carried in the xylem, the vessel of the plant which carries water. Xylella colonises xylem vessels and blocks them, leading to disease symptoms including wilts, diebacks, stunts and leaf scorches. Initially found in the Americas, Xylella was confirmed in Europe in 2013 and has since infected cherry trees, almond trees, lavender shrubs and olive trees. It has caused significant damage to urban trees in the USA, olive production in southern Italy, and losses to citrus, coffee and grapevine production in the Americas. There are more than 300 host plants known so far although it is difficult to predict which UK plants could be vulnerable. Defra remains concerned about introduction to the UK through infected host plants imported as plants for planting. We heard about significant concerns from growers about Xylella surviving on host species in the UK, particularly given the frequency of imports of species that Xylella is known to survive on, such as fruit and nut trees, conifer and evergreen shrubs and bushes, and citrus trees and shrubs. The Woodland Trust told us that if Xylella “arrived at a UK nursery growing a number of those hosts, it would likely spread through the nursery decimating plants at an alarming rate at a huge financial cost to the nursery”.177 Martin Hillier, Director at Hillier Nurseries, warned that responding slowly to the disease could prove fatal, citing Defra’s response to the fungal disease known as ash dieback as “the most recent example of a long line of ‘after the horse has bolted’ biosecurity strategies”. He added that “the impact of our laissez faire biosecurity has been incalculable to the UK environment, our landscape and to our horticultural industry … The impact of slow or weak responses to these new threats would be utterly devastating.”178 The Government is working to tackle these threats through various avenues. For example, Dr Lee Beniston, Associate Director for Industry Partnerships & Collaborative R&D at the Biotechnology and Biological Sciences Research Council (BBSRC), told us about its combined £13 million research project focussing on bacterial plant diseases, with Xylella as a national priority. The project was a collaborative effort with the National Environment Research Council (NERC), Defra and the Scottish Government.179

Source: Defra UK Plant Health Information Portal, Xylella fastidiosa: https://planthealthportal.defra.gov.uk/pests-and-diseases/high-profile-pests-and-diseases/xylella/ [accessed 25 July 2023]; Defra, Plant pest factsheet: Xylella fastidiosa (2023): https://planthealthportal.defra.gov.uk/assets/factsheets/Xf-Plant-Pest-Factsheet-2023-March.pdf https://planthealthportal.defra.gov.uk/assets/factsheets/Xf-Plant-Pest-Factsheet-2023-March.pdf [accessed 18 October 2023]

111.The Woodland Trust argues that greater self-sufficiency is the solution to challenges like Xylella. It argues that “the single most effective biosecurity safeguard is to reduce the need for imported plants and source all trees for planting in the UK, from stock that has been grown its entire lifespan in GB.” It suggests improving labelling for UK-grown trees that enable consumer confidence that the product they are buying is biosecure and UK-grown.180

Plant Healthy Certification Scheme

112.The Plant Health Alliance is made up of organisations from across ornamental horticulture, forestry and land management including trade associations like the HTA and British Association of Landscape Industries (BALI), NGOs like the National Trust and government agencies as well as Defra.181 In 2019, it set out requirements for a voluntary Plant Healthy Certification Scheme for plant biosecurity. The Scheme enables businesses and organisations to be independently audited.182

113.The Government is working with the Alliance to promote uptake and has published a five-year roadmap for the scheme including ambitions to make the logo more widely recognised, the integration of contemporary evidence and better knowledge sharing, the establishment of the Alliance as a charity to raise income, and to increase staff and compliance capabilities.183

114.We heard support for the scheme from various organisations including the Royal Horticultural Society (RHS) and the National Trust.184 Martin Hillier, Director at Hillier Nurseries, told us that the Plant Healthy accreditation scheme was a “good start” but should be compulsory and be set at a higher bar with bronze, silver and gold standards. It said that all importers and public realm procurement providers should hold this accreditation.185

115.Jennifer Pheasey raised cost barriers to SMEs being involved in the scheme. She said that SMEs “ have a huge amount to deal with in their businesses, as we have already discussed, and this comes at a cost”, suggesting exploration of the ways in which more businesses could be helped to gain accreditation.186 The Plant Health Alliance told us that it is working to develop robust auditing systems for smaller businesses and community groups.187

116.Biosecurity is of fundamental importance, and it is essential to assess this risk during the import and export process. However current processes are unwieldy and do not account for the huge variance in plant types captured under the same risk categories.

117.The risk model proposed in the Border Target Operating Model should be kept under review and more clarity provided to accompany risk status updates.

118.The Plant Healthy Certification Scheme is a positive mechanism by which to increase biosecurity and is supported by industry. Its widespread adoption should be championed by the Government.

119.The Plant Healthy Certification Scheme should be compulsory, and support must be provided to ensure SMEs are supported to achieve accreditation.

120.Boosting the availability of UK-grown plants will further enhance the UK horticultural sector and help to support UK biosecurity.

121.The Government should work with industry to promote a British kitemark for UK plant products in tandem with the recommended campaign to help consumers recognise what is unique and special about British produce.

Border Target Operating Model

122.In April 2023, the Government published its draft Border Target Operating Model (BTOM) for consultation, which sets out a plan to realise the ambitions of the 2025 Border Strategy.188 A final version was published on 29 August 2023, and will be progressively introduced from January 2024.189

123.The scheme sets out a new approach to security controls on imports as well as sanitary and phytosanitary (SPS) controls for plants and plant products. It outlines how controls will be simplified and digitised, and highlights plans for a new Single Trade Window to streamline processes for traders so that they only need to submit information once in one place. Key features of the BTOM include the following:

• Regulated plants and plant products have been categorised into high, medium and low risk categories for imports from the EU and will be categorised for non-EU countries goods shortly. These categories are weighted against the biosecurity risks posed and are linked to different types of import controls.
• High-risk plants and plant products will need to come through a Border Control Post (BCP) or Control Point (CP) and checks will no longer take place at Points of Destination.
• Paper-based phytosanitary certificates will be replaced with digitalised versions (ePhytos).
• The Government will explore automating the document checking process.
• The Government will reduce the requirement on traders to duplicate information input as part of the prenotification process through the Import of Products, Animals, Food and Feed System (IPAFFS), and a new intelligent search function will allow traders to search for a genus, species and commodity code more easily.
• It is exploring how on-site diagnostic testing technology can reduce the waiting times of consignments at the border and will train inspectors to use pest and pathogen detection technology.
• It will remove the requirement for a Common Health Entry Document (CHED), pre-notification, for plants and plant products and other objects that are under transit or transhipment, meaning that the burden of notification requirements and biosecurity risk where the final destination of goods is not Great Britain is removed.
• The inspection process will be streamlined to ensure that consignments are appropriately risked, while the new method will prioritise inspections of commodities that pose the highest biosecurity risk.
• The Government is exploring the introduction of a new Authorised Operator Status (AOS) approach, which would allow eligible ‘trusted traders’ to manage their own SPS risks. This will be tested in Autumn 2023 and a pilot will be run in Q2 2024.190

124.The Government says that the BTOM “will deliver benefits to businesses by creating a seamless new ‘digital’ border which harnesses new technologies and makes use of digital data to reduce processes and administrative burdens for businesses, while also protecting the UK’s biosecurity standards”.191 It states that the estimated impact of the BTOM on food inflation is expected to be less than 0.2 per cent across three years.192 Despite this, we have heard concerns about several elements of the new scheme.

Timing and communication

125.The original BTOM was due to be rolled out from October 2023. Following the publication of the final BTOM, it will now be rolled out from 31 January 2024 with inspection at BCPs and CPs taking place from 30 April 2024.193

126.We support the Government’s delay to the implementation of the new regime, given the significant concern we have heard from most of the industry. Nigel Jenney, Chief Executive of the Fresh Produce Consortium, was critical of the lack of communication from Government. He argued that “we have had years to manage and plan the processes, yet everything is last minute. It appears to be poorly thought through, and ultimately the industry will pick up the pieces”.194

127.In the absence of its preferred option of a full SPS agreement with the EU, which would align plant health standards, the HTA called for the Government to delay the introduction of BCPs until the final BTOM and associated guidance had been published for at least a year and the trusted trader scheme was ready. Jennifer Pheasey told us that “it is absolutely crucial for us and the supply chains that we trade with internationally to have that time to prepare.”195

128.The HTA said it welcomed the delay to the introduction of checks at BCPs until 30 April 2024, although it expressed concerns the date falls in the middle of the high season for the plant trade.196 Conversely, the NFU said the delays were “hugely frustrating”, raising concerns about the effective prevention of outbreaks of pests and diseases and to level the playing field with UK goods entering the EU.197

Border Control Posts

129.From April 2024, border control checks will stop taking place at importers’ premises (a measure in place since January 2021) and move to BCPs.198 The NFU told us that “the current regime where inspections take place at the place of destination has worked well for growers, with checks conducted within an appropriate environment and in a timely fashion”, however it suggested the new model may present biosecurity risks if inspections are not conducted effectively.199

130.Similarly, Nigel Jenney told us that BCPs would add “no value for my industry”, instead suggesting that checks should remain on industry premises to that they can add value for subsequent distribution without additional cost.200 The HTA estimates the cost implications for BCPs to be around £42 million, with “no material gain or benefit to our businesses”.201 British Apples and Pears warned that the policy may cause supply chain disruption leading to the possible death of trees, increased costs and “catastrophic delays”.”202 The Government’s intends to respond to its consultation on charging arrangements at BCPs by the end of 2023.203

131.We also heard concerns that the pilot of the AOS scheme should take place before BCPs come into use.204 The West Sussex Growers’ Association told us that the current regime whereby checks are carried out at the place of destination should be extended until the AOS scheme is finalised.205 Following the publication of the final BTOM, both the HTA and the NFU were critical that the rollout of BCPs will take place before the pilot of the AOS is complete. The NFU also asked for greater clarity on the process by which businesses can become Control Points, including costs.206

Common User Charge

132.Defra is consulting on its plans to charge for eligible SPS consignments via a Common User Charge to recover operating costs. The consultation suggests that the charge could be between £20 and £43 per consignment, aside from fees for customs agents and SPS inspections.207

133.At present, the definition of ‘consignment’ is unclear as to whether it refers to a vehicle or one part of the goods within it. Nigel Jenney suggested one vehicle with 40 or 50 products could cost as much as £2,000 if the latter, which may drive SMEs “out of existence”. Alternatively, such additional costs may be passed on to consumers.208

Risk-based approach

134.Under the BTOM, a new risk-based approach to border controls will include a harmonised regime for EU and non-EU countries in which the lowest-risk goods will be exempt from border controls and phytosanitary certificates but may be subject to enhanced inland monitoring. The risk categories for plants and plant products from the EU were published in August 2023 and categorisations for goods from the rest of the world will be published in due course. Low-risk goods include most fruit, vegetables and cut flowers. These will be exempt from systematic controls and will not require certification or pre-notification.209

135.The BTOM sets out that the frequency of ID and physical checks for plants for planting and produce with an identified pest or disease risk will reduce to between 3 and 5 per cent for most produce with exceptions where specific risk factors apply, rising to between 5 and 100 per cent for the highest risk products.210

136.Jennifer Pheasey told us that there were inherent challenges in this system. For example, she suggested that “a single petunia has the same risk profile as a fully mature oak tree, which inherently does not make sense”.211 Nigel Jenney told us that the risk-based system was easy to understand and “may well manage biosecurity, but they will outprice our food availability at a cost that we can’t afford”. He suggested that existing industry measures are more effective and asked that the risk-based approach should be accompanied by an online portal to allow businesses in the sector to see greater detail about trading activity.212

137.Following the publication of the final BTOM, the NFU asked why checks would take place on just 30 per cent of high-risk plants sold at retail compared to 100 per cent of the same plants for commercial production in UK nurseries. It said this could lead to greater risks of disease outbreak.213 Mark Spencer MP reassured us that the new model would remove barriers to trade and “expedite the process where we are safe but to put in regulation where there could be a problem”.214

138.We also heard that groupage is likely to further complicate how consignments are inspected.215 Groupage is the combination of consignments from multiple suppliers within one vehicle. Nigel Jenney told us that it was wrong to “assume that you can simply stop one vehicle and it will be a minor intrusion; it will affect many businesses on a very regular basis”.216 The final BTOM states that the Government “will work with importers and logistics firms who move mixed consignments to ensure complexity and cost is minimised under the new model”.217

Digitalisation

139.The need for processes to be digitalised to enable better communication with the sector was a common theme in evidence to our inquiry. We were told that IT failures were leading to paper-based systems being used as a backup in trade processes. Sandy Shepherd from Ball Colegrave described the following scenario:

“Think of the number of times we have to get pieces of paper by not embracing digitalisation. We are dealing with tens of thousands of products. There is a real example of trying to export to Ireland. Bearing in mind that our goods are very perishable, we have to pick the order first and put them into trolleys. The inspector comes along to say it is okay, and then he communicates with York that the product is okay. Guess what? We cannot go up and collect it. We have to get it printed out at York and mailed down to us. We may get it the next day or the day after, and the goods are declining in quality every day. That is what is going on in this country. I am sorry, but it is just crazy.”218

140.We heard support for the introduction of better digitalisation in the import process. The All-Party Parliamentary Gardening and Horticulture group said that ePhytos would be welcomed in tandem with a robust biosecurity regime.219

The Windsor Framework

141.The Windsor Framework was agreed in February 2023 and set out arrangements to ensure smooth trade within the UK internal market.220 Since 1 October 2023, businesses are able to move prepacked retail goods as well as some loose goods including fruit and vegetables through a ‘green lane’ to Northern Ireland under the new Retail Movement Scheme.221

142.The BTOM confirms that checks and controls will be introduced for Irish goods moving from Ireland to Great Britain. In accordance with the Windsor Framework, Northern Ireland businesses will retain unfettered access to Great Britain, whether moving qualifying NI goods directly from Northern Ireland or indirectly through Irish ports. This applies except for a limited subset of goods such as endangered species. SPS requirements will need to be followed for non-qualifying SPS goods moving from Northern Ireland to Great Britain or via Ireland, depending on risk categorisation. None of the additional checks or controls in the BTOM apply to imports from the EU into Northern Ireland to provide Northern Ireland trades with full access to the EU market.222 Mark Spencer MP told us that the “Windsor Framework has been a huge step forward”.223

143.The publication of the final BTOM is welcome and we are pleased that the updated timeframe offers more opportunity to allow the horticultural sector to prepare for implementation. However, the sector continues to operate amidst serious uncertainty given a lack of clarity on timelines for digitalisation and the AOS scheme.

144.The Government should set out clear timelines for the integration of new and upgraded technologies. It should urgently set out its plans including costs and timeframes for the pilot and implementation of the AOS scheme to enable a seamless transition for businesses in the sector. The Government should keep the relationship between the Windsor Framework and the BTOM under review to ensure effectiveness.

145.Communication on the implementation of the BTOM has been poor, which has left importers feeling unsupported. The successful implementation of the BTOM must not be jeopardised by a lack of communication with industry.

146.The Government must communicate clearly and collaboratively with industry during implementation of the BTOM. It should make good on its promise to work with importers utilising groupage to clarify procedures and ensure complexity and cost is minimised. This should include reviewing the possibility of easements for SMEs and clearly setting out the costs associated with operating and using BCPs and CPs.

147.The costs of the Common User Charge could be enormous for horticultural businesses, particularly for SMEs and exporters to the UK. Yet there is no clear information on the impact on businesses or consumers and no clear definition of ‘consignment’.

148.The Government must define ‘consignment’ for the purposes of charges under the new model. The response to the consultation on the Common User Charge should be published as soon as possible. If it should go ahead, the charge should be reviewed regularly to ensure costs are not squeezing out small businesses.

CITES

149.The UK is a signatory to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). It includes plant species such as cacti, orchids, and cyclamen.224 Under the BTOM, species covered by the CITES will need to continue to meet existing import requirements.225

150.We have heard that there are issues in how CITES is applied in the UK. The system is primarily paper-based, which results in time delays and in some cases the destruction of consignments that have mistakenly not received a wet stamp.226 For example, Tammy Woodhouse, Managing Director at Millbrook Garden Company and Chairman of the Garden Centre Association, told us that the rules have led to plants such as Cacti being impounded and destroyed at ports, which is “costly and wasteful for all growers and retailers”.227

151.The HTA called for processes to enable faster turnaround times for issuing permits and removing the necessity for hauliers to physically stop for a wet stamp.228 We are not aware that this has been done at the time of the publication of this report. Jennifer Pheasey called for digitalisation of the system, which she described as “a fundamentally antiquated system that we could quite easily take action on to improve and make fit for purpose”.229

152.In the UK, CITES imports require an import permit, which the HTA argues is unnecessary and could be removed to reduce administrative burdens and the duplication of information already included on the CITES permit.230 The All-Party Parliamentary Gardening and Horticulture Group told us that the “approach to CITES has locked the industry in inflexible and inefficient administrative processes”.231

153.Defra says Border Force has increased numbers in their team specialising in CITES.232 It has been reported in trade media that Defra is introducing a new IT system for CITES, which will be rolled out in the summer and is intended to improve administration turnaround times. Defra is also reportedly scoping the introduction of digital permits.233

154.Ineffective CITES processes and costs are inhibiting effective imports of plant species into the UK and leading to the destruction of legitimately traded plants.

155.CITES processes should be digitalised and import permits should be scrapped to reduce duplication of paperwork. The administrational cost of obtaining a CITES permit should be reviewed to allow SMEs to trade effectively. A more flexible mechanism must be put in place to protect legitimately traded plants being destroyed due to incorrect paperwork. In the case of no-fault destruction of consignments, the Government should consider a mechanism to reimburse growers.

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