Brexit is not the only influence affecting the cost of fruits, nuts & seeds... climate and the Donald Trump effect also have roles to play
There’s no escaping the rising costs that are inextricably linked to one political issue. It’s Brexit, innit?
But while the slump in sterling following the Brexit vote has been a big factor, the situation is far more complex when it comes to nuts, seeds and fruit.
“After the pound collapsed post-Brexit, importing costs rose,” says Mark Setterfield, MD of dried ingredients importer RM Curtis. “The double whammy has been where the pound went down and markets went up.”
Environmental factors and vagaries in supply and demand have played a crucial role in the escalation of costs. Blue poppy seeds are a case in point, says Mintec senior market analyst Jara Zicha.
“The Czech Republic is the biggest blue poppy seed producer in the world, so the Czech price (£2.08/kg in February, up from £1.05 a year earlier) is a benchmark,” he says. “Last May and April were very cold and there was a drought and high temperatures in June. Production fell 28%.”
The unfavourable conditions coincided with rising demand and falls in production.
“Prices of dried coconut have increased due to heightened demand, and natural elements such as decreasing rainfall,” says Tasneem Backhouse, joint MD of EHL Ingredients, which she says is experiencing strong sales of chia, flax and other seeds among bakers. Hence launches such as Warburtons Pulses & Seeds Batch loaf and Allinson’s 10 Seeds & Grains Bloomer.
“Inclusions such as seeds continue to be a hotbed of activity in bakery,” says Bakels marketing manager Michael Schofield. “But the cost has seen a significant increase.”
Again, it’s not all down to Brexit. A dry summer impacted the Bulgarian sunflower seed crop and China has reduced its plantings of pumpkins.
Similarly, rising Californian raisin prices are partly down to growers shifting to more lucrative crops such as pistachios. Iranian raisins were hit by harsh weather, driving more buyers to Turkey, where processors have switched from cheaper sultanas to raisins. Turkish sultana prices are up 29%.
As with pumpkin seeds, some suggest the price of Greek currants, up 44% year on year in January, has been exacerbated by farmers withholding stock. “Most of the currants historically imported into the UK come from Greece and their crop was short this year,” says Setterfield. “Offers are now very few and far between and, when they come, they are at increasingly high pricing and for very small volume.”
In some cases, buyers have responded by changing recipes or going to eastern Europe for their walnuts after a short crop in California, an area prized for quality. As for Brazils, some bakers’ response to the price spike (driven by a dire Bolivian crop) has been to use fewer or cut them out altogether.
As such, security of supply has at least as great an impact on choice of ingredients as currency fluctuations or consumer trends.
Almonds’ versatility and health credentials are key reasons for their growing popularity, but so is their relatively low price and steady supply from California, which accounts for 80% of global almond production.
“If something is stable and comparatively cheap, this will have a big bearing on whether it is selected as an ingredient,” says Setterfield. “As the core is stable and availability is okay, almonds are favourable.”
For now, Mintec says prices have hit a two-year high following recent California frosts and some have warned of souring relations between the US and its trading partners following President Trump’s imposition of tariffs on steel and aluminium imports. With the US a major player in the fruits, nuts and seeds, Brexit may soon not be getting all the blame for the rising price of baked goods. Soon it could be Trump too.
Key price trends
Information provided by RM Curtis
- Season to date: January was the fourth consecutive month of record shipments from California, with output up 17% year on year for the month. The full impact of recent frosts is yet to be seen, but Mintec reports prices have hit a two-year high.
- Prospects to next harvest: Almonds are in huge demand. Even if California continues to make record shipments, this is only just keeping up. Spain is also increasing production.
- Season to date: Buyers of California raisins have been hit with hefty price rises following a short crop last year. This, and a contraction in dried fruits from Iran, has led to higher demand for Turkish raisins and sultanas.
- Prospects to next harvest: Global stocks are set to dwindle, unless Californian and Iranian crops can return to normal. Chile and South Africa report good prospects for raisin crops.
- Season to date: The coming Vietnamese crop is looking better than it has been for the past two years, leading many to expect price falls – seen since the new year – to continue.
- Prospects to next harvest: Lower prices could prompt greater global demand for cashews, inspiring more planting. Yet some say any rise in production in Vietnam would lead to local resistance to prices falling below a certain point.
- Season to date: In recent months RM Curtis hasn’t been able to buy any currants from Greece, the world’s largest producer, as farmers hold on to stocks to push up prices following last year’s short crop.
- Prospects to next harvest: The situation in Greece is prompting some to turn to the South African and Californian markets, where prospects are good for the coming harvest.
- Season to date: US and Mexican pecan crops are more or less in line with last year, but surplus stocks in the hands of Chinese buyers, who have bought heavily over the past decade to satisfy soaring domestic demand, could result in falling prices.
- Prospects to next harvest: Commentators suggest price falls could be short-lived, with growing demand from outside China still to be covered.
- Season to date: Low prices to the last harvest stimulated strong demand for Turkish apricots. But despite a large crop, prices rose as Turkish traders held stocks and buyers did not cover their full-year needs due to currency fluctuations.
- Prospects to next harvest: Prices could stabilise from May, if the weather is kind, but the Malatya region can experience late frosts, pushing prices up.
- Season to date: A short Californian crop (down around 80,000 tonnes) has created price pressures, with some switching to cheaper eastern European and Chinese sources. Despite a hot summer last year, darker kernel availability is tight.
- Prospects to next harvest: Given the current scarcity, the November/December harvest seems a long way off, but a larger crop is expected, easing the pressure on prices.
- Season to date: China reduced pumpkin plantings last year in a bid to boost prices. But the effects of this are yet to be seen because of the amount of unshipped stock held in China.
- Prospects to next harvest: Domestic demand in China spikes at Chinese New Year (16 February 2018), so all eyes are on existing stocks. A stronger Chinese currency could lead to higher export costs.
- Season to date: The Bolivian crop is expected to return to normality – around 20,000 tonnes – following last year’s disastrous output of just 8,000, which sent prices soaring.
- Prospects to next harvest: As a wild crop, forward price predictions are difficult, but expectations are that prices will continue to fall as availability returns to normal.
- Season to date: Ample Bulgarian supply has helped keep prices low in spite of the challenges of increasingly hot, dry summers. Even with growing demand, Bulgaria can still produce a surplus.
- Prospects to next harvest: Some have voiced concerns that plantings will be reduced to bolster prices, but there is no evidence of this happening as yet.