40% of Belgian food producers to halt or reduce activity
According the Federation of the Belgian Food Industry (Fevia), up to 40% of food producers in Belgium are planning to temporarily halt or reduce their business.
Around 12% of the world's calories come from Ukrainian and Russian wheat. The war has prevented Ukrainian farmers from harvesting their crops and Russia has blocked ships exporting grain in response to international sanctions. This has had a profound impact on the global supply chain. There are even fears that supply shortages could worsen famine in vulnerable regions of Africa.
The trade federation surveyed 700 of its corporate members to understand how they were dealing with the supply chain impacts of the war in Ukraine. The results are worrying. Around 50% of Belgian food producers are facing shortages of ingredients such as oil and flour needed to make their food. Last year, rapeseed oil was available for €750 per ton. Now the same amount will cost €2,200 – almost three times as much.
Around 70% of companies have had to make changes to their products, or will have to do so in the near future. Products may even begin to taste slightly different. The Belgian government has allowed producers to use substitutes for ingredients that are short supply. For example, manufacturers of frozen chips or mayonnaise can now use alternative oil types, such as peanut or soybean, even if it does not match what is written on the label. Belgian consumers may also have noticed that they are also getting less for their money. Producers are struggling to pass on their costs and are therefore reducing the total amount of the food they produce.
While the industry began to recover from the effects of the pandemic, one thing that has not improved is the sector's profitability. High supply costs from the Covid-19 pandemic have been replaced with even higher costs from the war in Ukraine. The food production industry is energy-hungry and the conflict in Ukraine has driven bills through the roof. About 50% of Belgian food producers have seen their bills double, over a third saw them triple.
Fevia states that supermarkets are “not very open to discussing price increases”, which makes it hard for manufacturers to pass on costs. “This is a stress test for the entire food chain… In these extremely difficult circumstances, we can only get through this together,” Botelberge said.
The food production sector is now appealing for greater government support, including even more flexibility in labelling legislation, which will allow companies to save on raw materials and compensate for shortages. Fevia assures that this will not come at the expense of food safety.
(AS)
©BELGA PHOTO DIRK WAEM