Salad days are over for European food producers as energy costs bite

Tony Montalbano’s family has been growing vegetables in south-east England for decades, uninterrupted by recessions, economic shocks or bouts of high inflation.

But this year, the soaring cost of heating his greenhouses as a result of an escalating energy crisis unleashed by Russia’s war in Ukraine has forced him to consider abandoning cultivation of his usual crop of cucumbers.

“The pricing has gone out of control, it’s ridiculously high,” Montalbano, 40, said of his energy bills. This year’s output from his farm in the county of Essex would be half its normal size because of his moves to reduce costs, he added. “Gas has just shot up and that’s something I hadn’t prepared myself for.”

Across Europe, farmers and food businesses are cutting production as they struggle to cope with soaring energy costs. Montalbano said his energy bill was about five times what it was this time last year. The prospect of seasonal food shortages has prompted industry warnings and frantic calls for government support, at a time when Russia’s president Vladimir Putin has cut gas flows in response to western sanctions.

Crops that require intensive heating in colder climates, such as cucumbers, tomatoes and lettuce, are the most directly affected. But the energy crisis is impacting the European food supply chain more broadly, with bakers, dairy farmers and other producers, including of sugar beet and olives, also struggling to pay bills, as costs rise much faster than the prices they can secure from wholesalers.

Pekka Pesonen, secretary-general of Copa-Cogeca, which represents EU farmers, said this week that the knock-on effects of high bills had been more severe than expected. The price of inputs such as fertilisers and animal feed had shot up, while rising refrigeration, heating and transport costs had deterred farmers from planting.

The EU is discussing plans to cap the price of energy for companies and households but also mandate reductions in use, which could hit farmers. The UK has unveiled a plan that would support businesses, but only for six months.

But it is already too late for many. Jimmy Russo, co-owner of UK-based Valley Grown Salads, said: “I suspect that 75-80 per cent of UK salad growers will not plant next year . . . because it doesn’t make any economic sense. It’s fair to say the salad sector has been abandoned.”

The hot weather this summer has compounded the problem, leaving Russo unable to grow most of his normal crop. But natural gas which last year cost him 50p a therm now costs £3.75, and he has been quoted £5 a therm for the winter.

“You can’t sell a cucumber at £2.50,” he said.

In the Netherlands, which accounts for almost a fifth of world tomato exports, many glasshouses are going dark. Companies that normally use lighting to help grow tomatoes “will most likely not do so in the coming winter due to the high electricity price”, said Alexander Formsma, energy specialist at Glastuinbouw Nederland.

Alfred Pedersen & Son, the largest tomato supplier in Sweden and Denmark, which operates 350,000 square metres of greenhouses, said it was also switching off this winter. It supplies supermarkets with 20,000 tonnes of tomatoes a year, of which about a quarter is produced in the winter.

Energy costs have surged tenfold compared with last year, said Torben Roll, its chief operating officer. “A huge amount of tomatoes will be missing” from the northern European supply chain, he said, adding that growers in warmer climes such as Spain and Morocco might not be able to fill the gap.

Some French sugar beet growers have had to bring forward their harvest because of fears of a potential winter gas shortage. Tereos, France’s largest sugar producer, said it would move early to begin the energy-intensive process of turning the beets into sugar.

“There were worries among industrial groups that if there were gas shortages, they could get cut off,” said Timothé Masson, an economist with the French beet producers’ union.

While rising energy prices most directly affect the use of heated greenhouses in colder climates, farmers in warmer climates are still being hit by higher input costs and extreme weather.

In Italy, where growers were already struggling with a drought over the summer, about a third of the country’s farmers are operating at a loss, according to research for Italy’s farming union Coldiretti by data analysis firm Centro Studi Divulga.

Filippo De Miccolis Angelini, a Coldiretti member who farms grains and vegetables including olives at his farm in the southern Puglia region, said his monthly energy bill had almost tripled compared with last year, while fertiliser prices were four times higher. “We’ll press the olives for sure, but we’re very scared of the costs,” he said.

Some farmers are also choosing to sell on the electricity that they agreed to buy at a fixed rate, rather than use it for agriculture. “I know farmers who have a fixed-price contract for two years . . . and calculated that it doesn’t make any sense to use it rather than sell it, trade it to someone else. It’s a business decision,” said one.

Back in south-east England, Montalbano said some fellow growers closer to retirement age were pulling out, while those who owned land were also cashing in. But as a younger tenant, he said he had few options but to look at less energy intensive crops, such as peppers.

“If I don’t grow, how do I pay my bills?” he said. “I’m keeping going from my savings, meaning I’m going backwards. So where do I go?”