Cost of living: Food boss says prices could rise by up to 15%

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A leading food industry boss has warned that prices will spike as a result of the war in Ukraine.

Ronald Kers, the boss of food firm 2 Sisters, told the BBC that the cost of food could rise by up to 15% this year.

He added that the price the company pays for chicken from the farm has jumped.

Top UK flour producer GR Wright & Sons' has also warned its prices are "absolutely certain" to rise due to the conflict.

Russia and Ukraine are some of the world's biggest suppliers of wheat and exports are expected to be affected by the war.

In addition, the price of gas - which is used to heat greenhouses and to make fertiliser, which is essential to food production - has soared.

War in the region is likely to exacerbate prices that were already increasing during what has been described as a cost of living crisis, according to some experts.

2 Sisters employs more than 14,000 people in the UK and specialises in poultry and chilled foods.

Its chief executive told the BBC's Today programme that it had already been forced to pay 50% more for chicken it receives from farms.

He suggested that if the war continues for months, "fundamentally it means as a country we may need to start importing less and producing more ourselves".

"We need to work together with all supply chain partners to find a solution... it's a very complex issue."

Mr Kers also suggested that the UK's exit from the European Union had made matters more difficult, due to a bigger administrative burden for farmers and less alignment on rules with food companies on the continent.

Higher flour prices

Meanwhile, David Wright, managing director of flour milling company GR Wright & Sons', said that cost increases would "inevitably" be passed on to consumers.

The firm, which has over 44% of the market share for the UK's bread mixes, said it was already struggling with soaring inflation before the conflict, with costs jumping by 30% between September and December.

"Now we have a similar increase [in price due to Ukraine], but instead of it taking four months it has taken two weeks," Mr Wright told BBC Breakfast.

Each lorry load of wheat the firm buys costs now costs an extra £2,500, he said. With the company buying around 20 loads per day, it faces paying an extra £1m per month to keep the business running.

Though availability will not be an issue, Mr Wright said, he is "absolutely certain" that consumer prices will need to rise.

"The price is so high so quickly that if you don't put the price of flour up, businesses will go out of business - it's as simple as that," he added.

The comments come shortly after the National Farmers Union (NFU) warned that food production could be hit, affecting the affordability of food in the shops for years.

In a letter to the government last week, it called for urgent help for farmers.

"The government must act now, with a clear signal that food security is a priority for the nation," the NFU said.

NFU president Minette Batters also told the BBC last week that the rising cost of producing fruit, vegetables and meat could cause farmers to make less at a time when the nation needs more.

"I think the whole world has got to recognise that this is not something we've faced before, we are going to see wheat price inflation levels that have never happened," she said.

It suggested that farmers have been absorbing costs that have gone up so far.

Media caption,

Watch: Ros Atkins on why the war in Ukraine is pushing up food prices - and the likely impact on poorer countries

UK feed wheat prices, for example, are already 39% up on March 2021 at £279.40 a tonne, according to the Agriculture and Horticulture Development Board (AHDB)

Other organisations have warned that any costs passed on by food producers would hit those on the lowest incomes the hardest.

Research from the Resolution Foundation think tank published on Monday suggests that the war in Ukraine could see another spike in the cost of living this autumn.

It said that inflation, which tracks how the cost of living changes over time, could reach 10% for the poorest households, whose energy and food bills make up a bigger proportion of their budgets.

James Smith, research director at the Resolution Foundation, called on the chancellor to protect poorest households the "biggest cost of living crisis Britain has faced in generations" at his upcoming spring statement on 23 March.

The jump in oil prices since the beginning of the war in Ukraine has pushed up fuel prices, and the price of unleaded petrol hit another record high in the UK at the weekend.

The RAC said the average price of a litre of unleaded petrol hit 163.46p on Sunday, while diesel rose to 173.44p.

However, oil prices have fallen from their highs and the AA said that "wild" pump prices should stabilise or fall back this week, unless the price of oil takes off again.