Bakers, brewers and dairy farms brace for price hikes
Source: Times of Malta
By: Claudia Calleja
COVID was already driving up prices. Then came war in Ukraine.
Bakeries, brewers and milk producers are expecting the increase in the price of grains triggered by the Ukraine war to drive their costs higher with many saying they plan to absorb the blow for as long as financially feasible.
On Tuesday, Times of Malta reported how Malta’s biggest importer of grains, Federated Mills, warned of the possibility that other countries will start to restrict exports of grains and called for a national strategy on the importation of wheat.
While the problem is not imminent, it may affect the supply of products on the local market in the long run.
Klara Fava, from Golden Harvest bakery, said that since the war was impacting the biggest exporters of wheat – Ukraine and Russia – with neighbouring countries holding on to their supplies, this was set to impact the cost of producing bread.
“Our main ingredients are flour and water. We use thousands of tonnes of flour… the situation is not looking hopeful unless the government intervenes to support,” she said.
Fava said that while importing wheat from other countries, like France and Germany, remains an option, it is more costly since labour costs and transport fees were higher.
She noted that this was another blow after the COVID-19 pandemic had caused a worldwide shortage of raw materials, driving up costs.
A spokesperson for the Danish Bakery said that while it was too early to feel the effects of the Ukraine war, since they were still relying on stored flour, the situation was sure to impact the island.
“Unfortunately, we are not sheltered from the rest of the world,” she said.
“There is the MATIF price which determines the price of wheat and we are following that closely. This depends very much on how long the offensive will go on.
“Another key factor is the price of freight. We are committed to sustain the price increases ourselves until it is unprofitable.”
A spokesperson for Simonds Farsons Cisk, Malta’s leading brewery, said that higher prices were now expected.
“First and foremost, we must clarify that as brewers we do not import or utilise wheat but our main grain ingredient used in the brewing process is malted barley,” the spokesperson said.
“The instability on the market and pressure on availability, prices and shipments are not new to us and, in fact, started with COVID-19 in the early part of 2020.
“This situation has now been further aggravated by the current events taking place in Ukraine and, as a result, the uncertainty that started a couple of years ago is likely to stay with us a while longer. However, we remain vigilant and have taken measures to ensure continuity of supply to meet our demands, albeit, as with many other raw or packaging materials, this now comes at a higher price.”
On a similar note, Samuele D’Imperio, owner and director of Lord Chambray brewery, said the virus outbreak drove up the price of raw materials – mainly barley in the case of beer-making – and the war was expected to drive it up even further.https://0bba527576aadf051b18093e8d416c4d.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
This year, there were price hikes of up to 40 percent and the war would push that even higher.
D’Imperio said that in the eight years since the company started operating it had to increase its price once – by six percent – and hoped not to do it again in the near future.
Robert Cauchi, CEO of the Milk Producers’ Cooperative, explained that the increase in price of grains had a ripple effect that went beyond bread and beer.
He explained that the main components of animal feed are maize, barley and soya. Ukraine and Russia are the main producers of maize and barley. Due to the lack of raw materials caused by the pandemic, prices had already spiralled with barley soaring 96 percent since 2019.
The war is expected to drive the prices even higher.
“We have our stocks but they will not last forever. We are now hoping the situation will resolve itself,” he said, pointing out that milk producers will absorb the blow for as long as financially feasible.”
He noted there was also the chance that this would be long-term since the war in Ukraine meant no one there was tending to the fields, which would mean less supply.
While options included importing from other counties these come at added costs, he said, adding that discussions with the government are ongoing to find a way forward.