The CEO of Kraft Heinz, Miguel Patricio, warned that around the world and in the United States, people will have to get used to higher food prices due to “across the board” inflation.
“Specifically in the UK, with the lack of truck drivers,” Patricio said, explaining why there is a surge in food price increases. “In [the] U.S., logistic costs also increased substantially, and there’s a shortage of labor in certain areas of the economy.”
The CEO, however, stated that not all costs should be passed on to consumers.
“I think it’s up to us, and to the industry, and to the other companies to try to minimize these price increases,” he added, noting that “there’s a lot to come in technology to improve the effectiveness of farmers” that may help.
But Kona Haque, head of research at the agricultural commodities firm ED&F Man, told the BBC that food giants like Kraft, PepsiCo, and Nestle will likely “have to pass that cost on to consumers.”
“Whether it’s corn, sugar, coffee, soybeans, palm oil, you name it, all of these basic food commodities have been rising,” she said, noting recent challenges to the global market.
“Poor harvests in Brazil, which is one of the world’s biggest agricultural exporters, drought in Russia, reduced planting in the U.S., and stockpiling in China have combined with more expensive fertilizer, energy, and shipping costs to push prices up,” Haque remarked.
“When prices increase, we may or may not pass on such increases to our customers without suffering reduced volume, revenue, margins, and operating results,” the firm said.
It was, according to the U.N., “largely driven by higher prices of most cereals and vegetable oils” while “dairy and sugar prices were also firmer.” The meat price sub-index remained stable, the agency said.
David Ortega, associate professor and food economist at Michigan State University, said food prices will be impacted by a number of factors in the short term.
