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Rising prices to hit foodservice

By Nicholas Robinson , 20-Dec-2012

A UK procurement and supply chain company has warned that the catering and hospitality sectors are facing steep rises in food inflation in 2013.

At a launch event for its annual food inflation report, Prestige Purchasing’s chief executive David Read warned those in the foodservice sectors of further rises in food prices. He said: “What we’re seeing is a surge in food inflation which will continue into 2013. We may even, in due course, be heading back towards 2008 levels where food inflation peaked above 8%.”

Speaking at the Goring hotel in London, Read said that if the UK experienced inflation levels similar to those of four years ago it would have a big impact on the catering and hospitality sectors. “Per tonne production costs for agriculture are increasing significantly, due to low yields and a dramatic increase in feed costs,” he said. The chief executive also said that the rising costs of chemicals and oil would impact food inflation in a negative way.

Read predicted that in the longer term climate change, population growth and the increasing sophistication of the UK’s commodity markets would also continue to up the price of food in the coming years. He said, as a result, Prestige Purchasing expected to see food inflation rise above 2012 levels next year.

Pork

Read predicted that pork prices would see the biggest increase in the meat sector.

He told GlobalMeatNews.com: “We think that pork pricing is likely to rise in 2013. I saw that, on average, UK pig farmers are losing around £4 per sow and there are also EU reforms going through, which are making producers take a loss. We think there will be continued [market] exit from producers of pork and as a result there will be a price increase.”

The general manager for the UK’s National Pig Association (NPA), Zoe Davies, told GlobalMeatNews.com that although the NPA was not expecting compliance to be as high as it should be, the impact it would have on the price of pork “remains to be seen”.

“We will ensure that every UK retailer, processor, food service company and pork product manufacturer is acutely aware of the situation,” she said.

“Each Member State has varying degrees of sanctions in place to deal with those that have failed to make the necessary changes. Longer production cycles for pork mean that we are unlikely to see the dramatic impact on prices than we saw last January when the cage ban for laying hens came in, but feed prices are set to remain high for the foreseeable future and could well increase even further which will impact on producers’ decision to stay and invest in conversion or leave the industry.”

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