Tony's Talk - We are all facing challenging times!

November 1, 2021 Robert Fernandes

Every day over the last few months we have been battling hard paddling like hell underwater to send out your deliveries of the products essential to the running of your businesses. We have experienced some unprecedented challenges in logistics, product availability and product inflation. I will try to try to give you some insight as to why some essential products to our businesses are increasing in price so much.

Oils & Fats:

All oils and fats have reached record ‘highs’ because of poor harvests, labour shortages, extreme weather, and increased demand, as the World emerges from Covid. Countries are adding increased bio-fuel demands as they seek to ameliorate climate change which further exacerbates these shortages. Nobody has experienced anything like this before - even in wartime!

Palm Oil:

production is at an unusually low level in what is normally the peak production period because of dire labour shortage on the plantations. Immigrant workers were sent home at the start of Covid in both Malaysia and Indonesia leaving vast amounts of fruit to rot. Ever increasing demand for this restricted supply is driving up prices.

Soya Oil:

is effectively a by-product from the crushing of soya meal to feed beef cattle worldwide and, as herds are reduced, oil must take up a larger portion of the costs of crushing. This oil is in great demand for biofuels as well as being a staple food. Current harvesting in the USA and planting in Brazil (both major sources) are looking favourable. However, ‘futures’ of both crops have been sold heavily already and prices are still increasing!

Sunflower:

harvesting is still underway and is looking better than last year, but Rape has been a disaster and will remain very tight and expensive for most of 2022.

Dripping:

shortages are the result of reduced herds, labour difficulties in abattoirs and crude tallow getting a higher price than refined due to increased bio demand. It’s not a happy picture and there is no end in sight. Current prices in our market don’t reflect the costs of replacement to some tune!

Flour:

Although the UK has had a good harvest this year (14-15mln tonnes compared to <10mln. last year) world stocks have decreased, and wheat prices have moved up over the last few weeks. Millers are moving their prices up by 5-8% for Nov-Dec and this short period could be a warning of more to come!

Peas:

The harvest is now complete – quality OK but yields disappointing on a much-reduced acreage. There was no carry-over of the crop from 2020, the cupboard was completely bare! Some Companies will have no marrowfats to sell until next year’s harvest and are resorting to supplying ‘Blue’ peas. Blues are normally used for canning and are not a patch on marrowfats.

They are very small, have a poor taste and are not easy to cook, mushing to nothing or remaining hard. It really would be a false economy to put your best profit earner in jeopardy!

Next time we will look at the situation with Fish and Packaging supplies. In the meantime we hear that The Bank of England believes that inflation will hit 5% - not in the world of food m’lud! We think it would be wise to reflect increased commodity prices in your selling prices along with exercising strict portion control to safeguard your business against underlying cost inflation!

We are in a ‘LiteBite’ age!