British food producers are dealing with the double whammy of global inflation for raw materials and post-Brexit customs processes, according to reports.
Global food prices are at their highest in almost a decade, Bloomberg reports, after the United Nations gauge of world food costs for May climbed for the twelfth month in a row – its longest growth stretch in a decade.
According to the Times, although the increase is being felt most in poor countries, where people rely on imports of staples, richer countries are being hit by higher raw materials costs, leading to price hikes in supermarkets.
Price hikes at bay – for now
The British Retail Consortium’s Shop Price Index showed that British consumers in May saw prices going down with supermarkets fighting “hard to maintain market share and please thrifty customers by keeping prices low”.
However, the BRC’s Helen Dickinson warned that “global food prices are at their highest in seven years, shipping costs have risen threefold since 2019 and commodity prices are climbing. We will likely see these costs filter through in the second half of this year.”
EU is ‘too hard’
Meanwhile The Grocer reports that some UK food producers are considering cutting ties permanently with the EU due to the complexities of post-Brexit trade.
Neil Hammill, commercial director at Cambridge Commodities, claimed that many exporters were now weighing up whether to stop exporting the goods that encountered the worst frictions upon arrival in the EU – predominantly animal origin products and organics.
“I sense we’re going to end up putting them in the ‘too hard box’ over there and going: ‘OK, this is what’s left’, and it might be a business that’s 75% of the size,” he said.
However, brighter times may be ahead for UK food exporters as a new trade deal with Norway, Iceland and Liechtenstein was announced today that opens up opportunities for meat, cheese and whisky producers.
A deal with Australia is also in the pipeline, although it has produced concerns that UK farmers will be undercut by cheaper Australian meat producers, according to the FT.