James Ashton: If only food industry could capture the UK's feelgood factor
There was ample time to chat while the delayed Paralympics torch procession passed by Sainsbury's headquarters on Wednesday. Guests of the supermarket waiting to be bussed to the Olympic Park for the opening ceremony included plenty of suppliers. If only they could capture some of the feel-good factor for their businesses, but there are few crumbs of that in the food industry just now.
For bad news, you don't need to cross the Atlantic, where drought has pushed up corn prices. Grain suppliers in Britain are going bust because they can't fulfil forward orders struck when prices were lower. This year's crop will be one of most expensive to harvest, and also the most disappointing. It is amazing to think that the price of fertiliser has doubled since 2008 – and not unconnected that two of the country's largest vegetable distributors are merging. They, like the consumer, are at the mercy of speculators such as Barclays, who, as we report today, have profited handsomely from soaring commodity prices.
The upshot is that food firms face being squeezed between farmers trying to pass on cost rises and retailers reluctant to push up how much they charge the shopper. No wonder there is a round of consolidation going on in the middleground, as shown in the dairy industry, where profit margins on milk are wafer thin.
What is the moral? Suppliers need to stick close to the supermarkets – and not just by accompanying them on a day trip.
Ranjit Boparan, the frozen chicken tycoon, is one of the cleverest in the industry. He forever has a friend in Tesco for supporting the retailer when it set up in America. But producing food ever more efficiently doesn't seem the best long-term way to satisfy the nation's hunger.
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