Food prices: The rise is not over, it has reached the consumer

“It’s hard to know what’s going to happen in the coming months, but the truth is, prices do not reflect the increase in initial costs. This is very clear”, summarizes Andoni García, responsible for Agricultural Markets of the agricultural organization COAG. This view matches the view of some consulted from the food industry, oil, milk, bread and egg sectors. and ranchers’ rising costs of production did not reach supermarket shelves, and the question is whether it will eventually arrive, or vice versa, the impact will be distributed among the different links of the food chain. (manufacturers, industry, distributors, trade and consumers). What happens to energy and raw material prices in the coming months will partly determine the resilience capacity of each of these links.

Highest paid producers

Compared to previous inflation periods, farmers and ranchers are not left out from the price increase. According to COAG data, producer costs increased by 40% on average, with increases in fertilizers up to 150%; 90% in fuels or 38% in animal feed. The average wage for producers increased by 34%. Not as much as the increase in costs (40%), but a very close number And this, according to this organization, was thanks to the reform of the food chain law that went into effect in December 2021 to ensure – among other things – that producers could cover their own costs. According to the data of the Ministry of Agriculture, which coincided with the last week of August, the price of milk for farmers increased by 38.6% compared to the same period of 2021. Chicken meat price increased by 68%; lamb, 10.28%; beef rose 31.9% and pork 37%. However, these overall figures are certain industries that cannot cope with rising prices your inputs and suffering farm closure.

Olive oil: 13.2% increase

In this sector, food chain law is already a 40% increase in payments to farmersEven before the outbreak of war in Ukraine, explains Rafael Pico, director of Asoliva. The second reason for the increase in the price of olive oil for the consumer (13.2% according to the August CPI) is the increased demand for this product after the outbreak of war in Ukraine. radical shortage of supply sunflower oil and the consequent increase in price (more than 71%). According to Pico, there is a third reason that has to do with the expectation that the next olive harvest will be much reduced due to drought. This expectation now causes an increase in purchases and, as a result, additional pressure on prices. But from the point of view of Asoliva’s director, although the harvest will be less, tensions in prices therefore need to be very moderate: “there is enough fat So that it does not fall short in the national market or in exports,” assures Pico with data.

Eggs: 22.4% increase

María de Mar Fernández Poza, director of the Interprofessional Organization for Egg and Egg Products (Inprovo), points out that the rising cost of poultry feed is the main reason. 22.4% increase in consumer price of eggs, with August data. Tonnage of feed increased from an average of 252 euros between 2018 and 2020 to 421 euros at the end of August. Feed represents 65% to 70% of production costs in this industry. In addition to the rising cost of energy consumed on farms and processing centres, 50% increase in packaging. And to all this we must add the new consumer demands in favor of a more sustainable product: the difference between raising chickens in the cage or on the ground means a higher cost of up to 20%; If we talk about free range or organic eggs, the difference goes up to 50%. Low world production due to bird flu is another effect that puts pressure on prices. “The transfer of all higher costs to the final price has been delayed. There has been a receipt for months, price increases that do not correspond to production costs and now it has been seen that this situation cannot be sustained,” says Fernández Poza. “The problem is the time gap between rising production costs and being able to pass them on to the consumer.”

Bread: 15.2% increase

Production costs of the bakery industry, rising wheat and energy prices, especially. “We can’t influence the increase in the final price. It’s an everyday product and we can’t,” says Eduardo Villar, president and vice president of the Spanish Confederation of Bakery, Pastry, Pastry and Related Products (Ceoppan). President of the International Bakers and Confectioners Association (UIBC). She barely found the courage to raise her loaf of bread from 1.15 to 1.20 cents (4.34%) at her own bakery in La Rioja. 15.2% overall product increase. Some bakeries have chosen to reduce the weight of the loaf of bread in a phenomenon known as ‘refluffing’. “We can’t pass our costs on to the consumer,” Villar insists, and so the industry is calling for help from a group that has begun to seek help from the public sector. take action with protests in some provinces, as in Jaén last Friday.

Milk: 26% increase

With energy and raw material prices already pushing upwards in 2021, milk price for the consumer continued to fall. According to the federation’s general secretary, Luis Calabozo, a rise in milk prices, which reached 26% last month, which is still late compared to the increase in production costs, only started from September 2021. (Phenyl). “The increase reflects, on the one hand, the increase in production costs and the higher price of milk paid to the producer, while at the same time eroding margins slowing a larger increase.” According to the data of the last week of August, the price of one liter of milk paid to farmers increased by 38.6% compared to the same period of 2021; For its part, consumer price increased by the aforementioned 26% in August. There are other factors behind the increase in milk prices: Rising production costs, closure of farms and slaughter of cattle, creating an expectation of a decrease in production that contributes to pushing prices up. But Calabozo relativizes the effect. If the average price of a liter of private label milk drops from 0.69 to 0.86 euros per year, the impact for an average family could be around 41 euros per year (based on an average annual consumption of 70 liters per capita), the point came out of Phenil. With these coordinates, the dairy industry insists on the advisability of passing costs on to the consumer to avoid farm closures: “The effort to guarantee future access to this national raw material includes payment of this €41 by family”. However, the need to refer to the industry public aid guaranteeing the current production capacity of the sector