A leading food industry group has warned that the current energy cost crisis affecting businesses across the UK could result in gaps on supermarket shelves if smaller food suppliers buckle under the pressure.
Giving evidence to the business, energy and industrial strategy (BEIS) committee on the impact of the crisis, the Food and Drink Federation’s (FDF) Chief Executive Karen Betts highlighted that some of its members were seeing rises of between 400 and 500% in their energy bills.
“Our industry feels caught in the eye of a pretty powerful storm at the moment,” she said. “We know we have a huge responsibility to keep prices affordable, but all of our manufacturing companies are experiencing exponential rises.”
Betts pointed out the precarious situation smaller businesses in the food and drink supply chain have found themselves in due to soaring cost inflation. She suggested that some companies might fail, leading to a “tightening of supply in certain products” in shops.
The pandemic and the war in Ukraine have put a massive strain on the food and drink supply chain, and now the high energy costs are further squeezing companies that are energy intensive or are reliant on CO2.
“We’ve had that question of resilience for more than a year now,” Betts told MPs. “Whilst some work has been done by the government and by companies to introduce more resilience into the system, it is still pretty precarious, and that will feed into price rises. So it is a worrying time.”
She went on to say that companies have been cutting costs and introducing energy efficiencies wherever they can to keep food available, but the government needs to step in with more support.
“Our industry is struggling to absorb the level of regulation that’s coming at us on things like plastics and packaging – where we know we have got to get to good outcomes and we know we’ve got to get there quickly,” she said.
“We need a review of what the priorities are here, more support for these investments that need to be made in the green transition, and more listening to industry on how progress can be made in a more efficient and streamlined way than it’s currently envisaged by the government.”
NAM Implications:
- Betts suggested that some companies might fail, leading to a “tightening of supply in certain products” in shops.
- We would suggest ‘a flying certainty’ and a little more than some failing.
- (No one budgets for 500%+ cost increases…)
- Best for mults to make alternatives to minimise shelf-gaps…
- Or wait for shoppers to vote with their feet…
