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Monday, May 03 2010

Global food prices have been volatile for a couple of years now, leaving shoppers to make an uncomfortable choice between the cost of their shopping in a recession and buying healthy, natural foods.

So how have food shopping habits changed over this period? What has been the impact on the growing trend for natural, healthier foods and can anything be done to make food prices less volatile?

Oil price rises in early 2008 had a major impact on food prices - both because of the increased costs to farmers of producing them, plus increased costs of packaging materials and of transporting to the shops.

Alarm signals began to sound about food security and food scarcity in some parts of the world with large populations already living in extreme poverty and less able to absorb rising costs.

It was noticed in the more prosperous parts of the world, like the USA, that shoppers were becoming more aggressive in buying products on special offer.

Particularly in staple commodities like milk, bread, meats, coffee and cheese where there is less of a perceived difference between branded and private label quality they were also beginning to trade down to private label and value brand.

Then, in the autumn of 2008 came the credit crunch and by June 2009 the BBC was reporting that in the UK "one of the first things we've tried to cut back on is our spending on food".

Over the previous year food prices had risen by 8% and people had cut back on eating out in favour of staying in and cooking from scratch.

Local independent shops were reportedly receiving £50million less in sales and organic food sales were down 11% year on year.

While it was clear that organic and locally-produced foods - perceived traditionally to be more expensive - might be a loser the picture has turned out to be mixed.

For the year 2009 consultancy and research firm Organic Monitor estimated overall growth on organics in Europe was between 2 and 6 per cent, a drop from the double-digit growth rates of previous years but still unusually strong for a premium priced category.

Within Europe there were significant differences between countries. Growth rates varied according to the severity of the recession with organic sales worst hit in the UK and Spain - countries which were both badly affected by the recession, so consumers traded down to ordinary products and switched to cheaper retailers where organics have a weaker presence.

In Nov 2009, according to data compiled by the Steel Can Recycling Information Bureau, consumers suffering under the credit crunch were also eating 20% more canned food and drink than in 2007. Figures from Mintel highlighted a sales rise, with canned food worth £718m in the UK, with a predicted rise to £792m by 2012.

Shoppers in the US and UK were also buying cheaper custs of meat with 40% of them saying they had changed the way they bought meat and poultry compared with before the recession.

So where are we now?

While the recession has been declared officially over in most places, the after-effects are still being felt by people who have lost their jobs or gone onto part time working.

In the year to March 2010, UK food prices rose 1.2 per cent year-on-year, according to the British Retail Consortium's price index.

One factor that put upward pressure on prices was the return of VAT to 17.5 per cent on 1 January 2010. But also commodity price changes put upward pressure on food retail prices as fuel prices and packaging material costs increased.

In December 2009 The Food Channel predicted that a top food trend for 2010 would be for consumers to focus on buying pure, simple, clean and sustainable basic ingredients and shift from convenience foods to scratch cooking

Despite the rise in food prices there are signs that people are buying organic again. This year organic sales are expected to creep back up by 2-5%, according to the Soil Association's Organic Market Report 2010.

Meanwhile the squeeze on farmers to produce more at lower costs continues and the EU has approved a £20million farming crisis fund to give limited amounts of aid of up to €15,000 (£13,214) to UK farmers affected by the economic crisis until 31 December 2010.

So the pressure is still on to find more sustainable ways of farming to satisfy both consumer demand for healthy, natural, chemical - free food and the farmers' need to increase production in a sustainable way that preserves the quality of their land allows them to earn a reasonable living.

The CEO of the main US-based company researching and developing low-chem agricultural products has agreed on record that organic is currently a "middle class" option and he believes natural, healthy foods should be available affordably to everyone.

One way to achieve all this may lie in the new generations of biopesticides, biofungicides and yield enhancers that companies like his are increasingly developing to replace the older and more damaging chemical agricultural products being taken off the market.

Copyright (c) 2010 Alison Withers

Consumer journalist Ali Withers asks why shoppers should have to choose between economising in a recession and buying natural, healthier foods. The price of food is affected by the volatility of global commodity prices, which affects the costs of production, packaging and transport. Can the new low-chem agricultural products, such as biopesticides, currently being developed change the equation?

Posted by: Send a Meal AT 12:02 pm   |  Permalink   |  0 Comments  |  Email

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