# In the ‘Garden of England’, loss-making orchards are cut down
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-05
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Kent Farmer Struggles as Supermarkets Squeeze Profit Margins
Meta Description: Read about a UK fruit farmer's struggle amid a challenging supermarket market, climate issues, and labour shortages, leading to diversification.
URL: https://financedigest.com/in-the-garden-of-england-loss-making-orchards-are-cut-downhtml

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By Sarah Young

LINTON, England (Reuters) – The stumps of dozens of apple trees lie discarded along the side of a field. The fruit that helped give the “Garden of England” its name hundreds of years ago no longer makes money so farmer James Smith is tearing down his orchards.

[Shortages of tomatoes and cucumbers on Britain’s supermarket shelves earlier this year turned the spotlight onto the country’s food](https://www.financedigest.com/we-are-going-to-die-food-shortages-add-to-sri-lankas-woes.html "‘We are going to die’: Food shortages add to Sri Lanka’s woes") producers. For some of them, the ultra-competitive grocery market has gone too far.

I don’t really want to get rid of all of my fruit but I simply cannot see a way of [overcoming all of the challenges,”](https://www.financedigest.com/5-challenges-to-overcome-in-governance-risk-and-compliance-magazine.html "5 Challenges to Overcome in Governance, Risk and Compliance-Magazine") Smith said at his farm amid the rolling hills of Kent, southeast England, where his family have grown apples since 1882.

[Turning a profit from selling red apples to supermarkets has been a struggle for years](https://www.financedigest.com/2043-the-year-britain-will-turn-cashless.html "2043: The year Britain will turn cashless"), he said. A more unpredictable climate has been compounded by the lack of labour to pick fruit in the [years after Britain](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years") left the European Union. The surge in [inflation over the last year](https://www.financedigest.com/spains-inflation-to-be-lower-this-year-than-in-2022-minister.html "Spain’s inflation to be lower this year than in 2022 -minister") brought the situation to a head.

For 2022’s crop to break even, he said he needed supermarkets to pay him 20% more than the previous [year for each giant wooden crate of apples](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7"). Supermarkets offered 0.8% more.

It was the [final straw after years](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers") of losses.

If I stop growing fruit I can make money,” he said, explaining his [plans to diversify away from apples](https://www.financedigest.com/apple-plans-to-make-iphone-14-in-india-amid-china-woes-bloomberg-news.html "Apple plans to make iPhone 14 in India amid China woes – Bloomberg News") by turning to livestock, a vineyard and shop.

Britain’s fruit [production has been in decline](https://www.financedigest.com/roche-flags-2023-earnings-decline-on-slump-in-covid-products.html "Roche flags 2023 earnings decline on slump in COVID products") since 2015, according to government figures, and was down 12% in 2021 from the previous year. The [United Kingdom](https://www.financedigest.com/the-future-of-fintech-and-open-source-cloud-solutions-in-the-united-kingdom.html "The future of fintech and open source cloud solutions in the United Kingdom") imports about 85% of its fruit needs annually.

Supermarkets say they need to hold prices down for consumers, who are grappling with a [cost of living crisis](https://www.financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisis.html "‘Indefensible’: UK’s Sunak under fire over response to cost of living crisis"). Grocery [price inflation stood at a record](https://www.financedigest.com/tesla-posts-record-quarterly-deliveries-after-price-cuts-up-4-from-q4.html "Tesla posts record quarterly deliveries after price cuts, up 4% from Q4") level of 17.5% according to the most recent industry data for March.

The British Retail Consortium, which represents supermarkets, said they source the majority of their food from the United Kingdom and [know they need](https://www.financedigest.com/4-things-you-need-to-know-about-mortgages.html "4 Things you Need to Know About Mortgages") to pay farmers a sustainable price.

PROBLEMS FOR THE FUTURE

Given the pressure on British farmers at the moment, [retailers are paying more for their produce,” BRC’s](https://www.financedigest.com/valentines-day-spending-boosts-british-retail-sales-in-february-brc.html "Valentine’s Day spending boosts British retail sales in February – BRC") Director of Food & Sustainability Andrew Opie said.

But Smith, who over the last decade said he has supplied all the big supermarkets, including most recently Tesco and Aldi, via a [partner group](https://www.financedigest.com/havas-media-group-partners-with-lumen-research-to-measure-and-optimise-attention-at-global-scale.html "Havas Media Group Partners with Lumen Research to Measure and Optimise Attention at Global Scale"), said supermarkets do not pay enough.

Retailers are completely committed to making sure we can’t make any sensible profit, not even in the good years,” said Smith, whose title is [managing director](https://www.financedigest.com/anya-libova-joins-apester-as-uk-managing-director.html "Anya Libova joins Apester as UK Managing Director") of Loddington Farm.

By squeezing domestic producers so hard, he believes [retailers are storing up problems for the future](https://www.financedigest.com/cracking-the-code-of-customers-future-value-in-retail.html "Cracking the code of customers’ future value in retail").

If other farmers like him stop producing at scale, [Britain will be more reliant on imports](https://www.financedigest.com/exclusive-indian-car-makers-propose-tax-cut-on-imports-in-trade-deal-with-britain.html "Exclusive-Indian car makers propose tax cut on imports in trade deal with Britain") and vulnerable to supply shocks.

For the farmers that stick it out, it will be a battle.

Clearly a grower with no [margins hasn’t got the profits](https://www.financedigest.com/inflation-boosts-jeronimo-martins-q4-profit-but-dents-margins.html "Inflation boosts Jeronimo Martins’ Q4 profit but dents margins") to invest back in the business,” said Richard Napier, professor in plant and agricultural biosciences at the University of Warwick.

In Kent, Smith is removing 80% of his orchards. Last [year growing apples lost him 150,000 pounds](https://www.financedigest.com/commonenergy-mistakes-costing-homeowners-hundreds-of-pounds-each-year.html "Commonenergy mistakes costing homeowners hundreds of pounds each year") ($186,000), a loss which would have been higher had it not been cushioned by other income streams from his land.

Last harvest’s Braeburn apples have not been sold. Wooden crates stacked eight high are loaded in a warehouse where they are kept at between 0.5 and 1 degree Celsius to [keep them fresh and provide supply](https://www.financedigest.com/food-inflation-tight-grain-oilseed-supplies-to-keep-prices-elevated.html "Food inflation: Tight grain, oilseed supplies to keep prices elevated") whatever the season.

That means [big energy costs](https://www.financedigest.com/exclusive-with-eye-on-big-tech-energy-crisis-eu-telcos-call-for-shared-network-costs.html "Exclusive-With eye on Big Tech, energy crisis, EU telcos call for shared network costs"). Last October, [Smith’s monthly energy cost per kilowatt hour was 450% higher](https://www.financedigest.com/ds-smith-says-cardboard-box-volumes-strong-flags-higher-costs.html "DS Smith says cardboard box volumes strong; flags higher costs") than the previous year. Labour costs were up 15%, while the [price he paid for the wires and posts](https://www.financedigest.com/euro-zone-posts-record-trade-deficit-in-august-amid-soaring-energy-prices.html "Euro zone posts record trade deficit in August amid soaring energy prices") used to structure the orchards rose 15%.

Watching tree after tree being ripped out of the soil as most of his orchards are cleared, Smith said he had no time to be nostalgic as turning his [back on commercial apple production was the best way](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back") to ensure his family’s farm survives.

He’s bought a juicing [business for which he will continue to grow a small](https://www.financedigest.com/5-common-tax-mistakes-small-businesses-make-in-australia.html "5 Common Tax Mistakes Small Businesses Make in Australia") amount of apples. Pigs and [chickens will be brought in to graze on the former orchards and there’s a farm shop selling juice and other produce](https://www.financedigest.com/britains-binge-on-cheap-food-is-over-biggest-chicken-producer-says.html "Britain’s binge on cheap food is over, biggest chicken producer says").

He’s also planting a vineyard and is growing small amounts of cherries, the fruit which legend has it prompted King Henry VIII to first [call Kent the “Garden of England”](https://www.financedigest.com/bank-of-england-calls-for-wage-restraint-to-keep-grip-on-inflation.html "Bank of England calls for wage restraint to keep grip on inflation").

Under Smith’s plans, the [garden lives](https://www.financedigest.com/discover-the-charm-of-garden-square-living-in-cambridge.html "Discover The Charm Of Garden Square Living In Cambridge") on, but is producing less food than it once did.

(Reporting by Sarah Young and Gerhard Mey; Writing by Sarah Young; Editing by Janet Lawrence)


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