20 April, 2007
This week's huge rise in flour prices of around £68 per tonne is unprecedented (pg 4)! It will have major impact. The baking and milling industries are not prone to drama and, though I do understand when bakers are sceptical of any flour price rise, the combination of circumstances is unique.
We have been warning about impending price rises in flour for some time, particularly in our June 29 and July 6 issue lead stories and last week, when Lewis Wright, head of wheat trading at ADM, laid many of the reasons on the line.The millers are using words such as 'horrendous' about increases in wheat costs, describing the situation as 'critical', and 'very serious'. One of them said: "We are buckling under this situation. The prices have to be passed on". Another said; "I'm petrified, looking at the UK weather forecast on top of all this."I can tell by the tension in their voices and choice of words that this is a situation without precedence.Often in life, it is not one factor but a combination that causes an end result. In this price rise, it is precisely that: reduced plantings, increased demand, two years of weather extremes, rising demand for bioethanol fuel, rising costs in manufacturing. In all, it is forecast to put around 6p to 10p on a loaf. But as our bread prices chart on pages 14-15 shows, we are still among the cheapest in the world - and that should not be forgotten. Food in general has hit the headlines again this week, with price rises and health to the fore. We have seen announcements about how obesity does not discriminate between rich and poor (pg 6). There have also been warnings about the increase in Type 2 diabetes, currently costing the NHS £10m per year, and there have been demands for a 'fat tax', of VAT on cakes and biscuits. Though rejected for now, this, like the London congestion charge, could make a reappearance a few months or years down the line.The NA's Gill Brooks-Lonican dismisses the idea of a fat tax most aptly of all (pg 4), stating that cake and biscuits are a treat, moderate amounts of cream, butter and sugar (all natural products) are good for you and that the government should bring back more school sports. Amen to that!