Summer heatwave ‘not good news’ for fruit supply

10 August 2018

Fruit prices rose significantly in June due to the summer heatwave and increased demand, but sugar prices fell to a new low because of an abundance of crops, according to the CGA Prestige Foodservice Price Index (FPI).

The FPI, which is jointly produced by supply chain management firm Prestige Purchasing and home leisure market consultancy CGA, drew data from over half of the foodservice market and around 7.8m transactions per month.

The data showed a 5.2% month-on-month rise in fruit prices when compared to May, with the heatwave and labour troubles hindering growth in key areas. The FPI believed the prolonged hot weather in the UK caused fruits to ripen rapidly during a period when migrant pickers were in short supply. As a result, many crops were left rotting in fields.

Parts of Europe experienced similar problems, preventing imported fruits from bringing relief to the UK market. The FPI cited that many European fruit farms were threatened by fires which may have damaged crops.

During this same period, the price of sugar-related products decreased by 8.4%. Bumper crops in India were able to offset the adverse conditions experienced in Europe, Brazil and Australia.

The FPI also reported that the Global Sugar Alliance was increasing pressure on sugar-producing countries to remove their subsidies in countries like India and Pakistan.

 The new FPI highlighted the current “intense volatility” of food prices, said Fiona Speakman, CGA client director – food.

“The summer heatwaves have not been good news for the supply of many key items, and tariff wars and Brexit are starting to cast shadows over future imports,” Speakman said. “We will need to watch both macro and micro inflationary trends very closely in the months ahead.”

Prestige Purchasing’s chief executive Shaun Allen added that, while inflation in the sector had eased back for the first time since February, US tariff changes could add “further pressure and uncertainty into what is already a volatile market”.

Trade wars between the US, China and the EU have exasperated the turbulent foodservice sector, according to the FPI. The data showed a significant drop in US soybean prices after the Chinese government placed tariffs on the crop, and the FPI said that the potential impact of future meetings between political leaders of these countries on the foodservice sector remained unclear.

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