Aurelia Butler

ROYDON, England (Reuters) – In a small corner of south-east England, vast glasshouses stand empty, the soaring cost of energy preventing their owner from using heat to grow cucumbers for the British market.Elsewhere in the country growers have also failed to plant peppers, aubergines and tomatoes after a surge in natural gas prices late last year was exacerbated by Russia’s invasion of Ukraine, making the crops economically unviable. The hit to UK farms, which need gas to counter the country’s inclement weather, is one of the myriad ways the energy crisis and invasion have hit food supplies around the world, with global grain production and edible oils also under threat.In Britain it is likely to push food prices higher at a time of historic inflation, and threaten the availability of goods such as the quintessentially British cucumber sandwich served at the Wimbledon tennis tournament and big London hotels.While last year it cost about 25 pence to produce a cucumber in Britain, that has now doubled and is set to hit 70 pence when higher energy prices fully kick in, trade body British Growers says.Regular sized cucumbers were selling for as little as 43 pence at Britain’s biggest supermarket chains on Tuesday.”Gas prices being so sky high, it’s a worrying time,” grower Tony Montalbano told Reuters, while standing in an empty glasshouse at Roydon in the Lea Valley where for 54 years three generations of his family have farmed cucumbers.”All the years of us working hard to get to where we are, and then one year it could just all finish,” he said.All 30,000 square metres of glasshouse at his Green Acre Salads business, which supplies supermarket groups including market leader Tesco (OTC:TSCDY), Sainsbury’s and Morrisons, are currently empty.Montalbano, whose grandfather emigrated from Sicily in 1968 and started a nursery to provide local stores with fresh cucumbers, decided not to plant the first of the year’s three cycles in January.SOARING COSTSLast year he paid 40-50 pence a therm for natural gas. Last week it was 2.25 pounds a therm, having briefly hit a record 8 pounds in the wake of Russia’s invasion. Fertiliser prices have tripled versus last year, while the cost of carbon dioxide – used both to aid growing and in packaging – and hard-to-attain labour have also shot up.”We are now in an unprecedented situation where the cost increases have far outstripped a grower’s ability to do anything about them,” said Jack Ward, head of British Growers.It means a massive contraction for the industry, threatening Britain’s future food security, and further price rises for UK consumers already facing a bigger inflation hit than other countries in Europe following Brexit.UK inflation hit a 30-year high of 6.2% in February and is forecast to approach 9% in late 2022, contributing to the biggest fall in living standards since at least the 1950s.The National Farmers’ Union says the UK is sleepwalking into a food security crisis. It warns that UK production of peppers could fall from 100 million last year to 50 million this year, with cucumbers down from 80 million to 35 million.In winter, the UK has typically imported around 90% of crops like cucumbers and tomatoes, but has been nearly self-sufficient in the summer. The Lea Valley Growers Association, whose members produce about three-quarters of Britain’s cucumber and sweet pepper crop, said about 90% did not plant in January, while half have still not planted and will not plant if gas prices remain high.”There’s definitely going to be a lack of British produce in the supermarkets,” association secretary Lee Stiles said. “Whether there’s a lack of produce overall depends on where and how far away the retailers are prepared to source it from.”Growers in the Netherlands, one of Britain’s key salad suppliers, face similar challenges and have reduced exports. Spain and Morocco do not heat their glasshouses to a large extent, but delivery to the UK in chilled lorries adds time and cost.Joe Shepherdson of the UK’s Cucumber Growers Association said those growers that have planted are using less heat, but that reduces production and increases the risk of disease.PRESSURE ON PRICES Britain’s biggest supermarket groups, including Tesco, Sainsbury’s, Asda and Marks & Spencer (OTC:MAKSY), acknowledge the pressures in the market but say they are confident about supply, stressing their long-term partnerships with growers.How far the increase in production costs will translate to higher prices on the shelf depends largely on whether supermarkets opt to absorb the difference themselves, or pass it on to consumers.Smaller retailers buying from the market may struggle.”Any cut in production from suppliers would undoubtedly put further pressure on prices,” said Andrew Opie, director of food and sustainability at retail industry lobby group the British Retail Consortium.Growers want help from the government. They have lobbied for tax and levies on gas to be removed, but finance minister Rishi Sunak did not mention it in his spring budget last week.Despite the dismal backdrop and after much soul-searching, Montalbano will plant a crop next month, fearing the loss of future contracts if he does not. He may gamble on the British weather, and grow his plants “cold”, with little or no heat.”I feel like I have no choice, because if I don’t, then I lose my place,” he said, in a glasshouse that in a normal March would be packed with bushy green cucumber plants.”Am I going to make anything out of it? I’ll be quite happy to break even this year,” he said. More

COLOMBO (Reuters) -Sri Lanka is turning off street lights to save electricity, a minister said on Thursday, as its worst economic crisis in decades brought more power cuts and halted trading on its main stock market.The island of 22 million people is struggling with rolling blackouts for up to 13 hours a day because the government does not have enough foreign exchange for fuel imports. “We have already instructed officials to shut off street lights around the country to help conserve power,” Power Minister Pavithra Wanniarachchi told reporters.The power cuts add to the pain of Sri Lankans already dealing with shortages of essentials and rocketing prices.Retail inflation hit 18.7% in March over the same period a year ago, the statistics department said on Thursday. Food inflation reached 30.2% in March, partly driven by a currency devaluation and last year’s ban on chemical fertilisers that was later reversed.”This is the worst level of inflation Sri Lanka has experienced in over a decade,” said Dimantha Mathew, head of research at First Capital Research.A diesel shipment under a $500 million credit line from India was expected on Saturday, Wanniarachchi said, though she warned that would not fix the issue.”Once that arrives we will be able to reduce load shedding hours but until we receive rains, probably some time in May, power cuts will have to continue,” the minister said.”There’s nothing else we can do.”Water levels at reservoirs feeding hydro-electric projects had fallen to record lows, while demand had hit record highs during the hot, dry season, she said.STOCKS SLIDEThe Colombo Stock Exchange (CSE) cut daily trading to two hours from the usual four-and-a-half because of the power cuts for the rest of this week at the request of brokers, the bourse said in a statement.But shares slid after the market opened on Thursday and the CSE halted trading for 30 minutes – the third time in two days – after an index tracking leading companies dropped by more than 5%.”Concerns on the macro side, together with news of shorter trading hours plus increased power cuts, is driving negative sentiment,” said Roshini Gamage, an analyst at brokerage firm Lanka Securities.The crisis is a result of badly-timed tax cuts and the impact of the coronavirus pandemic coupled with historically weak government finances, leading to foreign exchange reserves dropping by 70% in the last two years. Sri Lanka was left with reserves of $2.31 billion as of February, forcing the government to seek help from the International Monetary Fund and other countries, including India and China. More

In a country better known for eco-tourism and peaceful stability in a turbulent region, Costa Rica’s presidential campaign has been an unusually negative one.Neither Rodrigo Chaves or rival José María Figueres has been widely embraced by the electorate ahead of the presidential run-off due to take place on Sunday. In the first round in February, they garnered less than half of the vote between them. Turnout was low by the country’s standards.Chaves, a former World Bank official who was accused by multiple former colleagues of sexual harassment, has a slight edge over Figueres, a former president, who stepped down as executive director of the World Economic Forum in 2004 amid scrutiny over payments he received from telecoms firm Alcatel-Lucent. Both denied wrongdoing.“[Voters] have to choose between candidates who both have more negatives than positives,” said Jorge Vargas Cullell, director of Costa Rica-based research centre Programa Estado de la Nación. “It’s not a campaign that’s generated a lot of enthusiasm.”A recent poll showed Chaves with 41 per cent of the vote and Figueres at 38 per cent, with the gap tightening and within the margin of error, according to the University of Costa Rica’s centre for political science research (CIEP). The high number of undecided voters, particularly women and young people, could also swing the vote in either direction.During the second round campaigning, “negativity and the lack of policies has been very marked, we’ve seen very grotesque adverts,” said Jesús Guzmán Castillo, researcher at the CIEP. “It’s meant that a lot of people are demotivated to go out and vote.”One advert that appeared on social media compared voting for Chaves to people throwing themselves off a building, causing outrage over its portrayal of suicide. Figueres’ campaign said it did not make or endorse the ad.Whoever wins will have to manage cutting the deficit under a deal with the IMF and tackle high unemployment and inflation while navigating a divided congress and voters disenchanted with traditional parties.Chaves worked at the World Bank for more than 25 years, eventually running its Indonesia office. While at the bank, multiple female colleagues said he made unwelcome sexual comments, inquiries about personal relationships and attempted to kiss them, according to an administrative tribunal decision at the institution. The bank later apologised to the women for mishandling the sexual harassment claims. Shortly before Chaves left the institution he was demoted and his access to the premises was later restricted, the tribunal decision showed. Figueres, who was president from 1994 to 1998, has scored poorly with voters on the issue of corruption. He was investigated by prosecutors over payments worth more than $900,000 from Alcatel-Lucent for consulting work after he left office. At the time of the investigation he lived outside the country and did not return until after prosecutors dropped it. No charges were ever brought.Both candidates, who declined interview requests, have previously denied wrongdoing. Figueres and Chaves have both vowed to renegotiate a deal struck last January with the IMF for a $1.8bn credit line. The country’s deficit was more than 5 per cent of GDP in 2021, with the debt burden growing.If elected they will face the difficult task of trying to bring down the budget deficit amid growing fatigue with those measures, said economist and former central bank chief Ronulfo Jiménez.“Whoever wins, regardless of what they think . . . reality will bite, Costa Rica needs to follow the agreement with the fund,” he said. “Politically it’s getting increasingly difficult to comply with the fiscal rules.”On paper the two broadly centrist candidates, both of whom studied in the US, appear economically orthodox. Figueres has highlighted his experience while Chaves, who lived outside the country for much of his career, has cast himself as the change candidate.Neither candidate is seen as particularly close to the private sector, though some economists and business leaders have expressed worries over Chaves as a lesser-known entity. He served briefly as finance minister in the current administration, but it is not clear who he would choose for his own economic team if elected.“One of the challenges is how to generate more private investment . . . to generate more jobs and really shrink the high unemployment rate,” said economist Fernando Naranjo, who served in Figueres’ previous administration and is on the boards of companies in the tourism and agriculture sectors.

One of Central America’s most peaceful democracies, Costa Rica is a haven for those fleeing authoritarianism in Nicaragua, and its GDP per capita is more than three times that of El Salvador or Honduras.Despite the relative stability, inequality has grown and affiliation with traditional parties has dropped. Carlos Alvarado, the outgoing president, will end his term as one of the least popular leaders in Latin America, according to CID Gallup polling. The pandemic economic recovery has been better than expected, but unemployment is high at 13 per cent.For Costa Rica to pass urgently needed reforms such as in pensions and the health system, the winner of Sunday’s run-off has to be ready to accept this new reality and work with other parties, Vargas Cullell said.Neither of the two candidates’ parties will have a majority in Congress. Figueres’ National Liberation party won 19 of 57 seats in the recent vote, compared to 10 for Chaves’ Social Democratic Progress party.“They are both weak candidates, who have [congressional] minorities, and are not loved by the electorate,” Vargas Cullell said. “The risk is neither understands that today governing in Costa Rica means pure coalition politics.” More

The UK economy grew faster than previously estimated in the final quarter of last year, but surging inflation resulted in a fall in households’ real income, shrinking savings and lower growth in spending even before the war in Ukraine led to soaring energy prices. UK gross domestic output grew 1.3 per cent between the third and fourth quarters of last year, stronger than the initial reading of 1 per cent according to the Office for National Statistics.Compared with the fourth quarter of 2019, before the pandemic, output was down only 0.1 per cent, revised from the previous estimate of a 0.4 per cent fall, meaning that the economy had largely recovered from the hit of the pandemic.The UK recovery is lagging those of the US and the eurozone, which passed pre-pandemic levels in the final quarter of 2021, although the German economy was still 1.1 per cent below this level.Output growth in health and social work activities was revised up to 4.3 per cent following the surge of Covid-19 infections and the extension of the vaccination programme. That pushed government expenditure to about 9 per cent above pre-pandemic levels, highlighting how a large part of the economic rebound is down to the government’s efforts to deal with the pandemic. In contrast, household expenditure rose less than previously estimated and was 1 per cent below pre-pandemic levels. This comes as real household disposable income fell by 0.1 per cent, reflecting surging inflation. Real income, adjusted for inflation, fell even before the jump in consumer prices expected in April and the autumn as the regulator increases its energy price cap to reflect escalating gas and oil prices following Russia’s invasion of Ukraine. This means that households bought more goods and services by reducing their savings. The household saving ratio, the average percentage of disposable income that is saved, decreased to 6.8 per cent in the last quarter of 2021, down from 7.5 per cent in the previous three months and the lowest since the start of the pandemic, ONS data showed.Barret Kupelian, senior economist at advisory firm PwC, said: “The revisions imply that UK households are entering a period where they will face a very substantial hit to their living standards with a smaller savings buffer than initially anticipated.“In the absence of further government support, this could mean that household consumption is cut back further and faster than initially estimated,” he added. “The quarterly pace of growth will slow as the squeeze on real incomes continues to bite,” said Paul Dales, economist at consultancy Capital Economics. He added that with high inflation more of a problem than weak GDP growth, the Bank of England was likely to raise interest rates from 0.75 per cent now to 2 per cent next year.Despite an upward revision, business investment was 8.6 per cent below pre-pandemic levels. The extremely low level is “due to Brexit uncertainty”, according to Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics.Exports were also a hefty 15.7 per cent below their level in the final quarter of 2019. Tombs said that UK “exports have consistently underperformed relative to other advanced economies since Q1 2021, suggesting that Brexit is largely to blame”. More

While inflation probably exceeded 7% this month, the ECB has long argued that it is likely to dip back below target in the coming years as energy price rises are not expected to persist.”It is also plausible that medium-term inflation will not revert to the pre-pandemic below-target equilibrium but, conditional on appropriately-calibrated monetary policy, rather may stabilise around the ECB’s 2% target,” Lane said in a speech. “We should also be fully prepared to appropriately revise our monetary policy settings if the energy price shock and the Russia-Ukraine war were to result in a significant deterioration in macroeconomic prospects,” Lane added.The ECB plans to end bond purchases in the third quarter, a prerequisite to any interest rate increase, but has not made any commitments about a rate hike, although a growing number of conservative policymakers are calling for a move before the end of the year. Lane however stressed that given the uncertainty, the ECB must maintain “two-sided” optionality, meaning the next move could be either tightening or easing. “More than ever, it is important to maintain optionality in the conduct of monetary policy,” he said. More