‘Era of cheap food is over’

Our food has been too cheap for too long and prices are only going to go up. Even the boss of Tesco is admitting it.

Between 2007 and 2012 the price of food in Britain rose 32% - according to Defra - and that could just be the start, the boss of Tesco has admitted.

"It's the basic law of supply and demand", Phillip Clarke told The Observer. "There's going to be more demand and more pressure.

"Over the long term I think food prices and peoples' proportion of income may well be going up but we'll be doing our bit,” he said.

He’s not the first supermarket boss to make this warning.

Mark Price, managing director of Waitrose, agrees. In January he told The Sun: “We’re seeing input food inflation of around 3 to 3.5%, but we expect it go up to as much as five.

“In some commodities, the increases will be massive,” he added. “It’s bread, vegetables, all produce. The apple crop was down 20 to 30% so apple prices have to go up. You have only seen the tip of the iceberg.”

Last year saw one of the worst harvests in decades after persistent rain ruined crops – followed by a big freeze at the start of the year preventing the planting of winter crops. This meant “British wheat only” policies were temporarily suspended by companies such as Hovis and Weetabix was forced to scale back production.

And bad wheat production doesn’t just affect your bread and biscuit budget. Grain is used to feed chickens and cows – which produce milk, eggs and cheese as well as being grown for meat. Animal feed prices rose 50% in 15 months thanks to the poor harvest.

Not just a British problem

The UK still produces more than half of its own food, but poor harvests globally combined with rising costs of transport mean even imports are getting more expensive. This is made worse by the weak pound, seeing the cost of imports rise still further for British consumers.
In Brazil soaring tomato prices have led to rage on the streets while the UN warned that this year would see an all-time high in food price inflation.

"Food is going to be competed for on a global scale. There's been a lot written about where food prices are going to go but they are certaintly going to double, with some trebling. It's not just fruit and vegetables, but everything," Professor Tim Benton, from the University of Leeds, told the Daily Telegraph.

But there is some hope. Recent history shows food prices can fall as fast as they can rise.

Sugar prices doubled in a little over a year between May and December in 2010, but since July in 2011 they have been consistently dropping – losing 45% of their value by June 2013.

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