With the increased costs on the Foodservice Industry, Supply Chains & Transport; the food industry are having to increase their prices to alleviate some of the pressures from these on-going costs. With the forecast still looking alarming for the rest of the year we will continue to monitor your pricing month on month and update our news posts with any upcoming information.
Throughout June and going into July commodity products such as Butter, Egg, Milk and Oil are continuing to increase. Throughout this post we will shine a light on all of these areas and explain why changes are happening.
The price of EU butter hit a record high of €7,205/MT on 13th April, up 76% compared to the same period last year (when the market was still affected by the pandemic). Supply remained tight while demand for fats was strong, which lifted prices. Also, high cream and vegetable fat prices have influenced butter pricing during the last quarter. Since the war in Ukraine commenced, buying interest has picked up due to fears about supply. However, buyers have found it difficult to stockpile. With warmer weather and the spring flush, we would normally expect prices to start to soften. However, there is nothing ordinary about 2022 (or 2021 and 2020 for that matter) and with many cost drivers such as utilities, fuel, packaging and labour all experiencing inflation, prices could actually continue to remain at current levels.
So far in 2022, cheese prices have witnessed increases at levels that we have never seen before. Cheddar is at the highest level ever recorded, and continues to increase because creameries are currently short of milk. Cheddar prices have already increased by over 25% this year. In April, UK cheddar rose by 12.2% compared with the previous month, and an eye-watering 62% year on year. Product prices are reflecting strong demand and internal structural pressures. Availability issues with longer matured cheeses are expected to affect supply from the last quarter of 2022. The challenge has now shifted from a pricing issue to an availability one now, with an increased risk to service.
Before the huge international impact of the Ukraine war, rapeseed oil prices had started to ease in February, due to an increase in consumers switching from rapeseed and other vegetable oils to sunflower oil. Over the past three months, that has reversed, and the rapeseed oil market has increased sharply after the impact of the war and the subsequent shortage of sunflower oil, leading to hefty price hikes across all edible oils.
Egg availability has been and continues to be very challenging, both in the UK but also globally, with Europe and the US both badly hit by Avian Influenza. The UK has recently experienced its largest ever outbreak, lasting from October last year, which has resulted in almost 2 million laying hens being culled.
Labour, Fuel & Energy
Labour workers from Eastern Europe are almost wholly responsible for many jobs within the Foodservice industry. With the cost of living, fuel and labour continuing to spiral upwards, many of these workers are leaving the industry. This increases the difficulty in finding and retaining skilled employees. To incentivise workers many suppliers are offering increased wages, bonuses and packages to generate enough appeal to stay. Many Heavy Goods Vehicle drivers are seeing increased hours alongside major salary changes.
Alongside this is the ongoing increases on fuel and energy; the UK inflation hit a 40-year high at over 9.1% With no clear outlook on prices returning to stability anytime soon it looks as though the forecast for the remained of 2022 sees more increases on the horizon.
All information shared from Bidfood Foodservice and Greetwell Purchasing Solutions