FDF statement on impacts of heatwaves

Dr Liliana Danila, Chief Economist, The Food and Drink Federation (FDF), said:

“Not only is the UK experiencing one of its hottest and driest summers on record, but across most of Europe heatwaves and severe droughts are impacting fruit, vegetable and grain supply. Competition for fewer resources will in turn push up the price of ingredients for manufacturers. The UK’s food and drink manufacturers work hard to absorb costs where they can, but are already grappling with rising costs as a result of war in Ukraine and in Iran, so we expect the additional upward pressure of reduced crops will be reflected in retail prices into next year.

“With extreme weather and supply chain disruption becoming the new normal, government must focus on building resilience into the food system to help limit the impact on food manufacturers and on shoppers. This means creating the right business conditions for manufacturers to invest in their growth and ensuring that policy decisions don’t add to the cost of making food.”

Background:

• Dry conditions have also reduced grass growth for livestock, increasing reliance on supplementary feed, and placed additional pressure on already stretched water resources for irrigation.
• Between January 2020 and June 2026, input costs just for manufacturers rose by 39.0%. This doesn’t include labour, regulatory and finance costs. Meanwhile retail food prices rose by at the same speed, a clear indication that producers have absorbed costs.
• Alongside the impact of drought, wheat prices have hit a two-year high due to the war in Ukraine. Russia and Ukraine have recently intensified their strikes on merchant vessels and harbour facilities across the Black Sea and Sea of Azov, severely impacting grain shipments.
• Heat and drought have accelerated crop development, bringing harvests forward but reducing both yields and grain quality.