One of the UK’s largest bread manufacturers has warned that prices could rise as the company expects “very small” grain harvests, increasing its dependence on imports.
George Weston, head of Associated British Foods, which owns Kingsmill, Ryvita, Twinings Tea, Dorset Cereals, and the discount fashion retailer Primark said that the group has not raised its food prices for the past six month after a period of high inflation last year.
He added, “UK cereal is one to be on the lookout for.” The UK harvest may be small in July and August, and we could be importing a large amount of grain.
He said that the increase in UK grain prices, such as wheat, might be offset by greater harvests in other parts of the world. However, this was not clear.
He said that while he did not plan to raise prices at this time, commodities and input costs could rise more than he anticipated. “The situation is, if not benign at this stage, more settled than in a long time.”
In many parts of Britain, farmers have not been able to plant crops like potatoes, wheat or vegetables during spring. Some of the winter and spring crops, such as oilseed rape that has been planted, are poor quality.
Weston made his comments as MPs warned that a “perfect hurricane” was brewing in the cooking oil market. Prices will rise because of the decline in UK production of oilseeds rape, along with poor harvests across southern Europe and the continued effect of the war in Ukraine on sunflower crops.
Robert Goodwill, the chair of the select committee for environment, food, and rural affairs, said at a hearing held on Tuesday that “a perfect storm is brewing in regards to vegetable oil and oil supply.”
He warned that many predicted that oilseed rape could “disappear” from our fields.
According to an analysis by the Energy and Climate Intelligence Unit, UK oileed rape yields, which are used to produce domestic and commercial cooking oils, will be 38% lower in 2019 compared to 2023 and 54% lower than the average yield from 2015.
Weston said that he did not expect clothing prices to fall, despite the fact that shipping costs and core materials like cotton have dropped. Weston said that higher labour costs in the UK where the minimum wage increased this month and other issues like business rates offset savings elsewhere.
It is also rebuilding profit margins, which have been in decline for the past few years as costs increased and prices were kept low during the cost-of-living crisis and pandemic.
Weston stated that margins have returned to pre-Covid and that Primark will “remain the leading retailer in the fashion industry”.
ABF announced a 37% increase in profits before tax to £881m for the six-month period ending 2 March, while sales increased 2% to reach £9.7bn.