The UK’s wholesale food industry is warning that it cannot protect consumers from price rises forever, as they face soaring transportation costs and are having to spend extra money on incentives in order to attract new workers.
It comes as the cost of products such as tomatoes has almost doubled in the past year, while the price of vegetable oil stands at a 30-year high. A kilogram of tomatoes wholesale now costs £1.47 compared with 75p a year ago.
Wholesale businesses are doing all they can to mitigate rising costs but will not be able to continue absorbing them, said Darren Labbett, the managing director of Woods Foodservice, a wholesaler that supplies the pub and restaurant trade. He said the industry was facing a “perfect storm” of adverse effects.
“We are trying our utmost to absorb as much of the increases as possible but we, as well as the rest of the supply chain, can’t absorb those price increases forever,” Labbett told BBC Radio 4’s Today programme. “Vegetable oil is at its highest price now for over 30 years.
“We are also taking other actions, and that’s by ordering in more stock in advance and carrying more stock than we would normally carry. We have doubled the lead time to ensure if there are any delays due to a shortage of lorry drivers that it doesn’t impact on the availability to our customers.”
However, Labbett said it was not possible to stock up on fresh produce because of its short shelf life.
The food industry is reporting a widespread lack of staff – including fruit and vegetable pickers, meat processors and HGV drivers – a shortage that has been exacerbated by Covid-19 and Brexit.
Businesses are having to offer higher wages or joining bonuses to bring in new workers, according to James Bielby, the chief executive of the Federation of Wholesale Distributors.
“Across the whole supply chain there are 500,000 vacancies currently. There is genuine wage inflation, which will lead to food price inflation,” Bielby said. “The labour shortage means you are having to pay drivers specifically more, and that will be passed on.”
It comes as the food wholesale sector is preparing for the busiest two weeks of the year, as pupils are returning to schools, employees are going back to their workplaces, and food services are ordering large amounts of produce to feed them.
The warning of impending food price rises comes only days after the food and drink industry called on the government to introduce a “Covid-19 recovery visa” to recruit overseas workers to ease disruption in the food supply chain.
“In the medium-term it is a good notion to train up more British people but it is not a short-term fix,” Bielby said.
“There is a skills shortage and just paying more won’t necessarily solve the problem; that is moving the deckchairs not putting people in the deckchairs. The skills gap needs to be filled, you can’t just pay people to be a meat processor, it is a skilled job and you need qualifications.”