The British food industry is preparing for a massive jump in food inflation in the wake of soaring animal feed prices, a shortage of silage and poor harvests. These key points could present ‘perfect storm’ conditions for sky-high food prices according to a new report.
Experts predict food prices could be at least ten per cent higher by early next year as cost hikes in animal feed – the first link in the food chain – sent shockwaves through the industry, The Grocer reported.
BOCM Pauls, the UK’s biggest animal feed supplier, reported a 20 per cent increase in the price of raw material feed on last year, following a 30 per cent spike in feed wheat costs. The company warned selling prices to dairy, poultry, beef and pig farmers would have to increase by the same amount over the next three months.
The National Farmers’ Union said the dry weather had added to problems for farmers by decimating yields of silage for winter feed by up to 50 per cent.
Food producers are already reeling from the soaring cost of commodities such as palm oil, cocoa and soya oil, which have leapt 39 per cent, 23 per cent and 14 per cent respectively since last year, according to Mintec figures.
Commodity experts from Russia have also announced that the country’s wheat exports could plummet by almost 50 per cent because of a drought, raising fears of a Russian export ban which would have a significant impact on UK food inflation.
John Devonald, a food market expert said: “All the conditions are set for a perfect storm in food prices. The implications of a much broader range of effects could see extreme results and possibly present economies with a double-dip recession.”