Last year, food companies were also affected by the Russian invasion of Ukraine. The resulting more expensive energy, logistical problems and rising raw material prices have pushed up production costs and also the final price for consumers. In November, food prices were almost 15% higher than twelve months earlier.
And for the moment there are no improvements in sight. A quarter of food companies, often energy-intensive, will see their fixed energy contracts expire and will have to pay at variable rates next year, which sometimes increases costs by three or four times, according to Fevia. The sector will also have to work out a wage indexation in January, as a result of which companies will have to pay out about 11% more wages.
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In addition, some contracts with suppliers will also have to be renegotiated. “Vendors who have lived up to their contracts and who have lost blood over the past year are just now knocking and are about to raise their prices substantially,” says Fevia president Anthony Botelberge. That inflation “has yet to reach the market.”
Fevia also complains that the food industry has to bear the brunt of the food chain. The industry federation criticizes the attitude of supermarket chains, which say they do not want to take on a “fair” share of the cost increases.
All of this puts pressure on the profitability of food companies, which weighs on investment plans and employment in the sector. Fevia therefore asks the government to adopt further measures on the cost of energy and wages and to curb “unfair practices” in the supply chain.
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