A body representing the Swedish food industry has warned of pressure facing the industry from a weak currency.
Livsmedelsföretagen, the association representing food companies in Sweden, said a record-low krona – and electricity shortages – represent “two dark clouds of cloudiness that can have strong negative consequences for the industry”.
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Acknowledging that the Swedish food industry had prospered during the second quarter of the year with increased sales volumes and a strong growth rate, the organisation nevertheless warned that a weak krona could lead to reduced productivity while an inadequate electricity grid could discourage continued investment.
“We see that members’ costs for raw and input goods continue to rise rapidly, mainly as a result of the weak krona and the lingering effects of last year’s drought,” it said in its latest report.
Carl Eckerdal, chief economist at Livsmedelsföretagen, said: “Hopefully, the cost pressure associated with the drought will decrease during the autumn, at least in dollars and euros, but unfortunately, the positive effects of declining world market prices on raw materials may be eaten up, in whole or in part, by the krona’s downward slide.”
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Livsmedelsföretagen points out the Swedish krona is at levels it has not been down to since the early 2000s, in terms of the US dollar exchange rate, or the financial crisis in 2008, in terms of the euro exchange rate.
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By GlobalData“Contrary to popular belief that a weak krona benefits the Swedish industry, the Livsmedelsföretagen business letter shows that many companies are adversely affected,” it said.
Eckerdal added: “The accepted truth that a weak krona is equivalent to profit-driven exports no longer holds. The Swedish export offer has become more and more complex, with a large proportion of imported raw and input goods or services becoming more expensive as the krona depreciates, and the companies are not able to compensate for the increased costs through increased delivery prices.”
