The organic food retailer Riverford has increased the price of its veg boxes by 5% as costs, including wages and transport, soar “across the board”.
The Devon-based company told its customers that after holding its prices for two years, widespread cost pressures meant “reluctantly, we need to increase our prices”.
Riverford delivers 80,000 veg boxes a week and this week’s changes mean a small seasonal veg box now costs 60p more, at £13.25, while a large fruit and veg delivery has risen £1.20 to £24.75.
The increase is the latest example of the cost of living squeeze hitting UK households as food and energy bills increase. Figures released on Wednesday from the supermarket analysts Kantar put grocery price inflation last month at 3.5%.
Rob Haward, Riverford’s managing director, said putting up its prices would enable it to ensure everyone in its supply chain was being treated fairly. The company has been employee-owned since 2018.
“The two biggest costs for us are pay for our co-owners who grow, pick, pack and deliver, and the prices we pay for fruit and veg from our farmers and growers,” he said.
Riverford workers received a pay rise of more than 8% in the autumn, while the prices paid to growers would rise about 5% this season, Haward said. “Our growers and farmers need this to cover the increasing costs of labor and fuel, and to reinvest in the farm.”
He also pointed to other cost pressures, with packaging up 6% and haulage up 10%. “This would probably all be OK for us as a business if it was short-lived but we expect all these costs to continue, so we had no choice but to reflect them in our prices.”
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
Shoppers have turned to the home delivery services offered by companies such as Riverford in large numbers since the coronavirus pandemic began. Sales of its veg boxes have increased from 50,000 a week at the start of 2020 to between 80,000 and 85,000 today, propelling its turnover to £76m.
Jack Ward, the chief executive of the British Growers Association, said the backdrop of steep cost increases, particularly for labor on hand-harvested crops, was starting to affect growers’ confidence. “People are saying: ‘We’re just going to cut back this year because we’re not sure we can get the staff we need to harvest the full extent of what we’d originally planned,’” he said.
“I think everyone is expecting prices in the shops to go up. There is a general issue now between how we reconcile the competing demands from consumers for static pricing and funding the cost of production where the costs are not static, they are increasing.”