Bulletin: Workforce supply crunch

Workforce supply crunch

Labour shortages are escalating into a strategic risk for the food and drink system as tightening workforce supply meets rising operational pressures. New IGD insight shows that challenges are now structural, driven by declining participation and long‑term sickness, affecting logistics, manufacturing, retail and specialist technical roles.

With food and drink businesses already navigating inflation, weak consumer confidence and regulatory uncertainty, reduced labour availability is limiting flexibility just as volatility intensifies. The sector now faces a critical need to adapt workforce strategies to support resilience and future growth.

See our latest article, Future workforce: Labour shortage risks grow.

Understand how IGD is supporting employers to build a future-fit workforce.

Sustainable foods 2026

At Sustainable Foods 2026, leaders across the food system rallied around one message: resilience is now the engine of sustainable growth.

From rebuilding domestic production to flexible supply chains and climate‑smart farming, the sector is shifting at pace. With skills gaps widening and aquaculture rising as a new frontier, the industry is acting with purpose - because those who invest in resilience today will be strongest tomorrow.

See our latest article - Resilience: insights from Sustainable Foods 2026

Net zero farming crunch

Key findings from a recent study show:

• Agricultural emissions are down just 5% in 15 years.

• Cuts must accelerate seven-fold to meet 2030 targets.

• Low‑carbon transition adds <1% to food prices

• Farmers risk income falls due to weak pricing power

• Policy makers should intervene to ensure costs are passed to consumers.

• Land‑use change is essential but disruptive, especially for tenant farmers

See our Net Zero Transition Plan for the UK Food System.

See A climate risk assessment of the UK food system.

Interest rates held

The Bank of England Monetary Policy Committee (MPC) has voted by a majority of 5-4  to hold interest rates at 3.75%. With four members of the MPC voting to reduce interest rates, the MPC report states that the “Bank rate is likely to be reduced further” with the extent and timing dependent on how the inflation outlook evolves.

Key forecast from the MPC include:

• CPI inflation is projected to fall to 2.1% in 2026 Q2

• Some further easing in wage growth is expected in 2026

• GDP is expected to pick up slightly in 2026 Q1 to 0.2%, though remain subdued with increasing labour‑market slack, reflecting the impact of tight monetary policy

IGD opinion

Inflation seems to be cooling slowly, although prices for services continue to drift upwards. This is odd, given generally poor economic performance and weak demand from UK consumers.

The MPC has big responsibility, but few tools at its disposal – and those tools are hard to use with precision. It is easy to understand why the MPC has been generally cautious, preferring to hold interest rates up until they can be absolutely certain that inflation is under control.

Unfortunately, inflation in the UK is driven mainly by supply chain factors including labour cost changes, rather than by high demand. It is likely that interest rate policy is less effective in regulating inflation than it would be if inflation was driven by demand.

New tool aims to improve farm nutrient planning

A free online nutrient planning tool has been released by Defra to help farmers match fertiliser and manure use to crop and soil needs. The tool is designed to reduce waste, limit nutrient losses to water and air, and support more efficient nutrient management. It is now available in England and Wales, with Scotland to follow.