Price Points

Cost watch: what’s going up and what’s going down in September

Prestige Purchasing’s chairman, David Read, provides a glimpse into the financial future.

2 September 2019
Brexitdairyfruitmeet the expertpricingseafoodvegetables

Meet the Expert

Who: David Read

What: Chairman

Where: Prestige Purchasing

 

Up until June this year we saw quite a big kick up in food prices, but these have now stalled as the nation’s eyes turn towards the outcomes of the Brexit process in October. Both supply availability and price will be affected by a no-deal departure, particularly in short shelf-life product such as salads.

DOWN! Fish and seafood diving 

Fish and seafood prices are easing at last, with a month-on-month fall of almost 9%, driven by softer prices in salmon markets after the Norwegian summer break. Buyers should, however, be wary of increases shortly, particularly in cod and haddock, when new (and potentially much higher) catch quotas are announced In September.

ONE TO WATCH! Blame the weather for unstable fruit and vegetables

image credit: Getty Images

Fruit prices continue to surge as apples, plums and other soft fruits have once again suffered from Italy’s current extreme weather. In July, the fruit-growing regions of Bolzano and Merano suffered an enormous storm consisting of heavy rain, huge hail and very strong winds which destroyed plants and ripening fruit in the region, and left soft fruits crops very sparse.

Weather challenges are also proving disastrous for limes in all export markets. Excessive heat in the Veracruz growing region of Mexico combined with wet weather has caused increased humidity and reduced the volume of limes produced.

And the ongoing weakening of the pound continues to drive the cost of imported produce upwards.

UP! Egg prices fly high

In spite of the easing cereal markets the cost of chicken feed is…. well, no longer as cheap as…. er, chicken feed. Over the past few months we have seen the cost of eggs rise considerably, with the cause being attributed to the rising price of feed. Right now there is no sign of this cracking, so ease up on the omelettes.

DOWN! In the land of milk, cream and cheese

image credit: Getty Images

The farmgate milk price has been steadily falling, as production hits all time highs. We’ve yet to see this fully feed through into foodservice supply markets, but expect this to happen in the weeks ahead.

ONE TO WATCH! Deal or no deal

Suppliers in the foodservice sector have been working on the assumption of no deal since long before March 29, the original Brexit deadline. Consensus amongst the larger suppliers seems to be that there will be considerable disruption in early November, but that the supply chain should adjust and cope before Christmas, even though the proportion of product imported in late October is higher than late March. But let’s not forget, there are just four weeks between Brexit day and the beginning of the Christmas trading period.

We know that the biggest challenge will be short-shelf-life product, particularly salad leaf. The key anxiety is delays at port, perhaps of two to three days which will cause some stock-outs and shorten the shelf life with the customer. Some suppliers are adopting strategies to buy product in a less ripe state to ease this issue, admitting that this may transfer some usability risk to the customer.

Larger wholesalers seem to be contracting only with suppliers that have robust and tested distribution arrangements, are resisting spot buying, and are spreading their risk on availability by contracting on a wider basis geographically.

Operators would be well advised to work closely with their suppliers to agree detailed contingency plans.

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