Savills : Are the stars aligning for controlled environment horticulture in the UK?

• New analysis from Savills found that to completely offset imports of tomatoes alone, the planted area under glass in the must increase by more than 150%
• In 2022, 85% of our salad vegetables were imported from three countries
• Globally significant events have affected the UK's reliance on imports of salad vegetables such as Brexit which has affected trade in fresh food - 2021 saw an 18% decrease in the import of salad vegetables from the EU and a 38% increase in non-EU imports
• The 2022 Food Strategy White Paper suggests high-tech horticultural systems rather than conventional agriculture could be the solution to enhancing resilience in UK food supply
• According to CambridgeHOK, a glasshouse build contractor, a premium vertical farm can cost 750% more than a basic greenhouse
• The energy centre of a new glasshouse accounts for almost half of the standalone price of the glasshouse unit.

Recent rationing of some salad vegetables in a number of supermarkets this year has highlighted our vulnerability in relying on imports for most of these products. In 2022 the UK imported 838,000 tonnes of salad vegetables (tomatoes, peppers, cucumbers and lettuce) 85% of which came from three countries; the Netherlands, Spain and Morocco. Latest analysis by Savills research published today in its Spotlight on controlled environment horticulture explores whether this supply crisis could be the catalyst required for major investment into the UK controlled environment horticulture sector enabling retailer supply chains to adopt a more UK-centric procurement practice.

Combined with the recent supply chain challenges there are multiple drivers pushing decision-making towards more efficient, technological methods of food production in the UK including policy, labour, consumers food and health and climate

The Food Strategy White paper released last year promised a follow up strategy for horticulture in England including a focus on delivering glasshouses; in order to achieve a resilient food supply it is clear current government policy is looking towards high-tech horticulture. Also documented in the food strategy is the aspiration for the skilled worker visa route to enable skilled professionals to bring their expertise to the UK, which in turn potentially reduces the need for seasonal labour given the focus on automation.

Promotion of domestic horticultural production in conjunction with facilitating fresh, local supply will contribute to an enhanced diet, currently enabled by the high proportion of imported salad vegetables. In many cases, harvesting food locally permits better development of the crop, yielding improved nutrition and flavour.

Controlled environment horticulture systems are a way of partially insulating against climate change and its impacts, such as those recently experienced in Spain and Morocco. Hi-tech systems also help guard against negative environmental impacts such as the importing of products from countries with water scarcity.

A new generation of glasshouses that are physically bigger than existing structures will be required if the UK is to move closer to self-sufficiency in salad vegetables. The current challenge here is the inflation in the prices of steel and glass. According to CambridgeHOK, a glasshouse build contractor, glass and steel costs rose 10% to 20% in the first six months of 2022. However, our analysis suggests the demand for produce grown in glasshouses is unlikely to wane.

Currently an average of 820 hectares of protected salad vegetables are planted per annum in the UK and to offset imports of tomatoes alone, the planted area in the UK must increase by more than 150%. If UK-grown tomatoes are to offset imports and contribute to adults achieving their five a-day to the same degree they contribute to current consumption rates, that planted area must increase by 222%.

Another major barrier to sector development is the exponential rise in energy costs. This, and the challenges around Brexit is encouraging some Netherlands-based growers to look at investment in the UK.

Our research suggests the energy centre costs are almost half (44%) of the standalone price of the glasshouse unit. So far horticulture has not benefited from any kind of dedicated energy subsidy during the ongoing crisis. One solution for investors into the sector would be the partnership approach, which would rely on co-location with sources of waste heat in order to secure cheaper energy and retain positive environmental credentials.

Joe Lloyd Savills research comments, "Investors may face cost challenges and international competition but the promise of controlled environment horticulture is incontrovertible. Besides the obvious market opportunity, demand for the qualities of the technology is only going to increase as climactic, labour and resource challenges bite."