High grain prices are forcing up costs, but with more money on the table, the world’s farmers can produce a lot more grain, delegates heard at the Home Grown Cereals’ Authority’s (HGCA) fourth annual conference on 14 March.
"Everybody in the food chain lately has been facing the squeeze," Jon Woolven, strategy director of the Institute of Grocery Distribution, told the Processor Conference in London. "Everybody is facing rising costs, which they are finding difficult to pass on in higher prices and none more so than the grain processing industry."
Alastair Dickie, director of crop marketing, HGCA, accepted that there was a problem for processors. "Farming is more profitable than it was a year ago and the raw materials for the proces-sing industry are more expensive," he said. The problem was a lower world wheat crop, rather than the rise in the use of grain for biofuels. "It has very little to do with biofuels," he said. "The food versus fuel debate ignores the economics. If you raise the price, you will get more grain. High prices secure supplies for the processing industry."
In historical terms, grain was cheap. "If you compare the price of a bakery good in 1977 the price has, broadly speaking, quadrupled and the price of grain has doubled," he said. "I would stop worrying. Concentrate on making the product, finding raw material supplies and using some sort of hedging."