Households are facing months of steep food price hikes and widening shelf gaps as war in Ukraine causes a major disruption in the supply of key ingredients, industry leaders have warned.
Producers have called on the government to urgently convene a national food security council to bolster supplies as a drastic drop in exports of wheat, sunflower oil, fish and fertilizers begins to wreak havoc on the along Europe’s already strained food supply chains.
The Food and Drink Federation (FDF) said the spike in prices will affect the cost of a wide range of commodities. Wheat is used in the feed of laying hens, as well as pigs and dairy cows, for example, while sunflower oil is found in processed foods, from spreads to ready meals and crisps.
“The war in Ukraine is causing significant supply chain disruption and ingredient shortages in the food and beverage industry,” said FDF international trade manager Dominic Goudie.
He called on the government to “mobilise the full arsenal of tools at our disposal” to protect households, including millions of vulnerable families, from further price hikes and support businesses through “a period of unrelenting turbulence”. previous”.
Official figures released this week show that food price inflation is accelerating. The increases are expected to accelerate later this year, deepening a cost of living crisis that threatens to push 1.3 million people into absolute poverty.
Inflation soared to 6.2% in February and is expected to exceed 8% by the fall, causing the worst decline in living standards since at least the 1950s. Rising food prices, catalyzed by the war in Ukraine, will hit the poorest families the hardest.
Russia and Ukraine account for more than 60% of the world’s sunflower oil supply and a third of wheat exports. While Russia has continued to ship wheat, exports from Ukraine have virtually ceased since Vladimir Putin launched his assault four weeks ago.
Particular fears are growing over vegetable oil supplies from Ukraine, where farmers are now expected to plant this year’s crop. Some farmers decide to sell their seed because they don’t believe they can harvest it, according to Kyle Holland, an analyst at Mintec, the leading provider of food pricing and analysis.
Others are expected to replace sunflower – which is mainly exported for profit – with subsistence crops like oats, which are vital to surviving an increasingly bloody war that shows little signs of a quick conclusion.
This would mean higher prices and uneven supplies of certain foods for European consumers. Sunflower oil prices have more than doubled since the start of the war and Mintec estimates that Europe has just three weeks’ supply left.
The total global area of land planted with sunflowers will halve this year, according to Mintec estimates.
“This could make the market inaccessible for a long time. The damage will take a long time to repair,” Mr Holland said.
High prices prompted producers to buy other oils such as rapeseed, but poor harvests limited supply. Rapeseed prices have increased by 90% in one year. This week, the UK government relaxed rules to allow food producers to substitute sunflower oil for alternatives without updating the packaging.
Meanwhile, nitrogen fertilizer exports also fell, leading to a five-fold increase in prices. The shortage threatens food production across Europe, potentially weakening the continent’s ability to offset imports from Russia and Ukraine.
Britain’s fertilizer trade body has accused the government of “minimising” or misunderstanding the seriousness of the situation. “We are desperately concerned about food safety,” said Jo Gilbertson, fertilizer manager at the Agricultural Industries Confederation (AIC). The AIC has requested a meeting with Environment Secretary George Eustice, but he has yet to grant it.
Mr Gilbertson warned that the situation could worsen as governments seek to impose new sanctions on Russia.
World wheat stocks are at their lowest level since 2006 and prices have jumped 62% since January. Although the UK does not import much wheat directly from Ukraine or Russia, any reduction in global supply has an impact here.
These supplies were already strained by weak harvests in the United States. In an unusual move, China has also publicly stated that it has had a very poor wheat harvest this year.
Beijing has come under scrutiny for building up vast grain stocks while other countries, particularly in the Middle East and Africa, struggle to import enough to feed their citizens.
The milk supply is also under pressure. On Friday, the UK’s biggest dairy, Arla Foods, warned that costs were rising at a record pace, leaving farmers struggling to cover their expenses. Arla is asking for higher wages for farmers to ensure they can keep producing milk.
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This notice was published: 2022-03-25 19:07:15