It’s now been almost 5 months since Russia invaded Ukraine. The war is having a devastating effect on the people of Ukraine, and we are all hoping for a resolution to the conflict as soon as possible, but the impact is far reaching, stretching well beyond the borders of Ukraine.
In this month’s blog, we wanted to examine how the war and other global issues are impacting the food industry in the UK.
‘Food prices have been affected by Covid. Some produce has lacked the migrant farm labour to harvest it, from Malaysian palm oil to Scottish berries. Easing of infection restrictions has seen demand come back, and that pushes up prices.
Supply chains have been disrupted, linked to much higher costs of sea-going freight.
Machinery costs have been rising steeply, where the chip shortage affecting car production has also extended to increasingly sophisticated tractors.
Rising energy prices have fed through to higher transport costs of reaching market, and much higher fertilizer prices. Natural gas is a necessary input for ammonia and nitrates.
These are not costs that farmers can easily pass on to customers. The market sets the price. But if fertilizer becomes more expensive, less is used, yields fall, so that total supply falls too, and after some time, prices go up.’ – BBC News, 7th March 2022.
Russia had been forecasted to be the biggest exporter of wheat this year, almost equalling the EU. Australia was third with Ukraine just behind them. Here in the UK, we are relatively self-sufficient when it comes to wheat, however this does not mean we are immune from the global impact.
Ukraine supplied 43 per cent of the corn used in the UK in 2019, much of it to feed livestock.
“Everything is linked to everything” Dr Alexander, a global food security lecturer at the University of Edinburgh. He pointed to how the price of meat and other animal-derived products is also bound to suffer as 35 per cent of the global supply of wheat is used for animal feed. The UK uses half of its wheat supply for animal feed.
Additionally, the increase in fuel prices are negatively impacting the haulage industries, the cost of which is being passed down to the consumer. If you throw the shortage of migrant farm labour into the mix, the result can only be higher prices along every step of the supply chain.
Have you felt the price increases in your business? You can let us know in the comments below.
If you would like to talk to a member of our team to learn more about how a Magnacooler can increase the productivity, and offset the supply chain cost increases you are experiencing, at your bakery please email info@magnacool.co.uk or call us on +44 (0) 1159 659539