A report investigating the costs to the industry of making peat reductions was published by Defra last week (download a copy of the report here).
The costs project undertook case study interviews with businesses from various parts of the horticultural industry and then scaled-up these results to provide indicative costs for the industry as a whole. The report shows that achieving the current levels of peat reduction cost UK growers around £43 million (between 1999-2008). The costs of peat reduction incurred by the growing media manufacturers over the same period is in the order of £58 million. The evidence in the report indicates that this cost has not been passed on to consumers, but has been absorbed by UK grower businesses and growing media manufacturers.
The report highlights that the market power of the retailers has allowed them to replace peat, at considerable cost to their suppliers, without passing the cost on to consumers. It comments that own-brand peat-based and peat-free growing media are generally sold by retailers at the same price – a situation echoed by previous discussions between the NFU and retailers where retailers have made it very clear that they do not believe their customers should have to pay a premium for peat-reduced products.
The report comments that despite the £100 million investment by industry to date in peat replacement, we have, for most growing purposes, still not been able to develop a peat-free growing media that is both better and cheaper than peat.
The report explains how a future faster rate of peat replacement will increase the costs of making the change, such that that achieving a future 75%, 90% or 100% peat-free target by 2020 would cost UK growers in the order of £25 million, £69 million or £77 million per year, respectively. While the highest total costs are associated with sectors like hardy nursery stock and mushrooms, when looked at in terms of a proportion of the total sector value the greater burden of 100% peat reduction would be borne by the mushroom, bulbs and pot plants sectors.
Achieving the 75% and 90% peat reduction targets by 2020 would cost the growing media manufacturers in the order of £1.5 million and £12 million per year, respectively.
The report concludes by stating that the cost of progressing the peat reduction target will increase, and that this cost cannot in future be borne by the industry. A conclusion clearly shared by the BPOA.
No comments have been made.