J: Thanks for taking the time to clarify some complicated topics, Mike. Can we start by exploring the biggest challenges being faced in food supply at the moment?
M: It would be difficult not to start with the very high levels of inflation, including food, that are affecting countries across the globe. When you explore the causes, you realise that this is the cumulative effect of many issues, which is why it is so pronounced and likely to be with us well into 2023. Inflation is expected to reach 30-year highs by the autumn.
The challenges include supply chains that are still trying to recover from the reverberations of the pandemic, port congestion and historically high energy prices that impact inputs across the entire supply chain from fertiliser prices, farming, manufacture, packaging, storage and distribution.
In fact, energy prices directly impact many of our core food staples as they are used to produce biofuels such as sugar and vegetable oils. Compound this with labour shortages, which are at critical levels within the UK food industry and amplify it again with the impacts of the war in Ukraine and the outlook continues to look very challenging for farmers, manufacturers, distributors, and catering teams.
Looking to the future this raises bigger questions about food security, the direction of travel for new international trade agreements, our agricultural policy and of course the environment. There are so many uncertainties that need to play out before we can truly appreciate what UK food systems will look like into the medium and long term.
Whilst inflation and labour are our most immediate challenges, in my opinion the biggest challenge facing the food industry is still sustainability. Our global food systems are just not sustainable or designed to feed a global population that is growing exponentially. The figures really are sobering, with our food systems accounting for 30% of all global greenhouse gases, requiring 70% of all fresh water, a quarter of our vegetated land suffers poor and degraded soils due to poor farming practice, two-thirds of biodiversity loss with one million species facing extinction, and 77% of agricultural land used for meat and dairy production produces only 18% of global calories.
J: It is sobering, indeed. Can you tell us a bit more about the specific commodities are facing disruption and what this means for the products we buy?
M: Most commodity prices are expected to remain stubbornly high in the medium term and particularly those in which Russia and the Ukraine are large exporters. Obviously, the duration of the war in Ukraine and extent of supply chain disruption will have a considerable impact on how long the supply side is constrained. Brent Crude Oil prices are expected to remain above $100 barrel throughout 2022 and both Russia and Belarus are major exporters of fertiliser due to their main inputs which includes natural gas. In some instances, fertiliser prices have tripled over the last two years, to levels that are comparable to the last great food crisis in 2008. Russia and Ukraine produce 28% of global wheat exports and 16% of maize, which is why they have reached an all-time high.
China’s strict zero covid policy and full city lockdowns continue to lead to disruption in supply chains and component parts, and it is also worth keeping an eye out for chicken prices, as feed accounts for up to 70% of the cost of producing chicken and we know what is happening to wheat and maize prices.
J: So, what are the things schools should be preparing for, for the autumn and winter?
M: Looking ahead to autumn, keep a keen eye on the UK and European potato growing season. The key metrics will be how much land is set aside for growing potatoes and the crop yields, which will be determined by the weather of course. A good season would help ease pricing on these key staples, but production capacity constraints and high demand have been the cause of some very stubborn chip prices.
With UK being 60% self-sufficient it is always worth keeping an eye on the strength of Sterling. Fears of stagflation and a potential recession might weigh heavy on the GBP, making imports more expensive. Conversely, any downside to the UK economy could also have demand impacts, which we would expect to soften.
J: What should catering teams or people managing food budgets be doing? What advice would you give to catering teams or people managing food budgets?
M: I would focus on working with allmanhall to identify where value can be released from the supply chain for your school. Is there an opportunity to consider cheaper bulk packs such as our 10kg or 15kg Tilda rice that offer better value? Is it time to reappraise which brands to use? A category like gravy and bouillons features multiple branded manufacturers at various price points and whilst a brand like Bisto might be considered traditional it does offer relative value. Likewise, the same is true for own label or branded goods choices. Whilst the trade off in quality doesn’t always allow, it is worth deciding where to premiumise and where to seek value.
For those core suppliers that offer drop discount incentives, I would look to take advantage where possible, even removing one delivery per week for your school can have a significant impact.
Protein items tend to be the most expensive items within a recipe, so tailoring recipes to amend the ratios of high value protein to vegetables or changing the menu ratios between higher cost recipes and more affordable ones. For example, pork will always be cheaper than beef or lamb. Forequarter beef cuts cheaper than hindquarter. As always, this needs to be made in consideration with offering a healthy, nutritious, and balanced diet.
Finally, managing food wastage in your school is also another key area to focus on. Reducing waste will not only reduce food cost but also reduce negative environmental impacts. In developed countries most food waste occurs at household and catering establishment level – this includes school kitchens and dining halls!
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