The outlook for commodity prices is “not going to get much better” in the short- to medium-term, UK bakers and confectioners were told today (25 April).
Godfrey Rowland, chairman of the Food and Drink Federation’s Biscuit, Cake, Chocolate and Confectionery (BCCC) sector group, said what had started as an “ingredient price revolution” in 2006, has now become “a moral issue”.
“We have seen an unprecedented increase in our input costs and in many ways we have had a ‘perfect storm’,” Rowland told the BCCC conference in Rugby. “In the last year we have seen droughts, floods and an increase in demand for meat in developing countries.”
Rising commodity costs, while painful for food manufacturers, had become “a moral issue” in parts of the world suffering from food shortages, Rowland said.
“In developing markets, price volatility is still leading to a lack of commitment and uncertainty amongst farmers,” Rowland said. “In the long term, there will be pressure to develop more land, which will drive water availability higher on the global political agenda. We could well see conflicts arising around the availability and ownership of water.”
While UK bakers and confectioners face increasing cost pressures, they are still being urged to invest in ameliorating their impact on the environment.
“Companies need to look up and down their supply chains and see what the carbon implication of their process is from production to disposal at landfill,” said Delvin Lane of The Carbon Trust.
It seems 67% of consumers are more likely to buy a product with a low carbon footprint, and this is an area the Trust is developing with manufacturers through its ‘Insource Energy’ plan.
“Looking at the food and drink sector we would like to reduce the waste and use of energy. Technology for waste is big in Europe and that is something we are driving for in the UK,” said Lane.
The Carbon Trust is hoping to establish AD (anaerobic digestion) facilities on the sites of large superstores and independent AD facilities for smaller manufacturers as part of its bid to help the UK reduce its reliance on non-renewable energy.
The UK wants 15% of its energy to come from renewable sources by 2020.
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