Food sector struggles to deal with rising ingredient prices

Posted on 26 Apr 2012

The government has called on producers and retailers to rethink their business models and support families by putting the consumer at the heart of their policies.

A parliamentary round-table event on food security was held yesterday with Jim Paice, Minister of State for Agriculture and Food and Laura Sandys MP present to discuss how the cheap food model is no longer sustainable.

Sandys called on producers, retailers and government to rethink their business models and put the consumer at the heart of their policies. Held against the backdrop of March’s food inflation figures which increased to 5.4%, up from 4.2% in February, she said that the UK must start to re-engineer our food sector around consumers’ ability to feed their families for less, despite unit price rises.

This year prices of goods have rocketed with the cost of English butter increasing by 40%, chocolate biscuits going up by 50% and coffee rising by 20%.

This is a trend that is expected to continue with wheat expected to be 42% more expensive by 2050, maize predicted to rise by 87% and rice increase by 32%, according to the Foresight Report’s price modelling.

“The policies of the past have resulted in the UK becoming the most dependent nation for imported food in the OECD. With a weak pound, high imports, high consumption of labour intensive foods and a loss of food skills in the home, we will become more and more vulnerable to the guaranteed rise in food commodities globally.”

Sandys has called for three key policy changes to help families with the cost of food. There is a fundamental difference between the price of food and the cost of feeding our families; however, the food industry is currently designed around a “stack ‘em high sell ‘em cheap” business model.

The panel questioned whether this model is appropriate considering the high level of waste. The UK wastes 40% of food from the farm to the fridge through distorted procurement and high quantity purchasing by incentivised consumers.

Discussions concluded by agreeing that the private sector could positively shape consumer behaviour by creating more innovative packaging, portion sizes, supermarket discounts and promoting greater resilience.

Last year, consumers threw away 7.2 million tonnes of food, amounting to £12bn per year or £680 per household.

The point was made that the supply chain needs to be more resilient. Climate change will have a huge impact on food production and supply adn so ministers agreed that, in order to satisfy UK demand, the Department for Environment, Food and Rural Affairs (DEFRA) must plan and prepare for the impact of international climate change.

Food has traditionally been devolved to DEFRA but the feeling among those charged with increasing food security in the UK is that a more integrated policy is required.