It is no secret that world food prices have already exceeded a 10-year high, and this is not the limit. Food is getting more expensive. What to expect in the near future?
According to data from the Food and Agriculture Organization of the United Nations, the cost of ingredients such as cereals and oils is at the heart of the rise in world food prices. Miguel Patricio, head of Kraft Heinz, explains that his company was simply forced to increase the cost of its products in some countries due to rising inflation. And it, in turn, is a consequence of the pandemic – quarantine and lockdown.
Against the backdrop of the coronavirus, the production of all types of raw materials has decreased in many countries – from vegetable oils to crops. Difficulties arose with the distribution of products. The resumption of economic growth has intensified demand, and suppliers simply do not have time to meet it, causing prices to rise. The pressure on producers has also increased due to the increase in energy prices, which, according to Mr. Patricio, together with other factors, increases the cost of products:
“There is a shortage of truck drivers in the UK. In the US, logistics costs have also increased significantly, and there is a shortage of labor in some areas of the economy.”
The head of Kraft Heinz believes that consumers will have to get used to high food prices. It should be taken into account that the population is increasing, while the amount of land for growing food remains the same. This issue needs to be addressed by improving technologies for a tangible increase in the efficiency of farms.
According to Kona Hack, head of research at the agricultural company ED&F Man, the additional costs of large food companies – Nestle, Kraft Heinz, PepsiCo – will be forced to pass on to consumers:
“Whether it’s corn, sugar, coffee, soybeans, palm oil, whatever, all these staple foods are getting more expensive. stocks in China, coupled with more expensive fertilizers, energy and transportation costs, have driven up prices. “
Kona Hak believes that this will affect absolutely all food producers – they will all raise prices approximately equally. At the same time, the loss of buyers does not threaten them, since the rise in price will be “all and at the same time.” PespsiCo, for example, warned as early as this week that, due to rising costs for literally everything from raw materials to transportation, further price increases are expected early next year.