Higher food prices on the horizon for the UK, warns FDF

21 Jul 2021 --- The UK Food and Drink Federation (FDF) has reignited stark warnings over escalating food prices if manufacturers are forced to absorb the cost of proposed government policies connected to health and sustainability during the next few years.

“This is before factoring in the suggested taxes on salt and sugar,” it warns in its latest report entitled Eating into Household Budgets, referencing the recently proposed levies on sugar and salt in Britain as part of the UK’s National Food Health Strategy.

While the introduction of food taxes is a main point of contention for the FDF, advocacy group Sustain has branded the association’s new report a “recipe for inaction.” The activists flag the ongoing climate and health crises as requiring more immediate action.

The FDF estimates that the cost of forthcoming policies passed onto consumers may raise the price of food per household by more than £160 (US$218) per year.Weighing the costs
The report targets seven government measures that are being implemented or introduced by 2024 to address the industrial levels of plastic waste in the food system, as well as to tackle healthier eating and reduce junk food marketing as part of a government-led obesity strategy.

“What this report fails to consider is that any cost to food industry profits are hugely outweighed by existing and future health and environmental costs that have to be picked up by taxpayers and affect the quality of people’s lives,” responds Ben Reynolds, deputy CEO of Sustain.

“This report is a recipe for inaction, to justify slow or no progress among the laggards in the food industry while discouraging those businesses who are leading the way.”

Barbara Crowther, a coordinator at Children’s Food Campaign, working with Sustain, adds: “People are fed up with constantly being bombarded by junk food marketing, and the proposed restrictions on advertising and promotions are hugely popular with the public.”

“We agree that healthy food must be affordable for those on low incomes, but it’s unhealthy food and drink packed with sugar, salt and saturated fat that is the target of government measures. The report is an ill-disguised attempt to undermine government regulations and put industry profit margins and shareholder returns ahead of public health and protecting the planet.”

Forthcoming policies
The FDF calculates that proposed government policies around public health and sustainability will cost the national industry at least £8 billion (US$9.3 billion).

The impending policies include the reforming of Extended Producer responsibility for the disposal of post-consumer goods (£1.7 billion; US$2.3 billion), a Deposit Return Scheme on food and drink packaging (£850 million; US$1.2 billion), and the introduction of promotional restrictions on foods high in fat, sugar and salt (£833 million; US$1.2 billion).

“In the midst of a climate emergency and health crisis, it’s shameful this report has selected all the measures designed to tackle obesity and reduce industrial levels of pollution and waste,” Crowther remarks.

In the new report, the FDF estimates that if the cost of forthcoming government policies were passed on directly to consumers, it would increase the price of food and drink shopping per household by more than £160 (US$218) per year.

These additional costs also come at a time of rising inflationary pressures, underscores the FDF.“We absolutely accept the need to address the pressing concerns around sustainability and obesity,” says Ian Wright, FDF chief executive. “Our members are doing so on an epic scale through active commitments to net zero and reformulation.”

“The suggestion that we should introduce further food taxes at this time is madness. It is an insult to the hardworking families of this country to be told what to do by those who can’t begin to imagine how tough the last year has been.”

“Close to breaking point”
The FDF analysis further suggests poorer socio-economic households would see their shopping bills increase by 11 percent, the same proportion of their entire food shop which is currently spent on fresh vegetables.

According to the UK’s Office for National Statistics (ONS) estimates, a household of one adult and one child in the poorest 10 percent by income spends £45 (US$61) per week on food and drink, meaning the government’s proposals could lead to an increase in food spending of nearly 7 percent.

These additional costs from government policies also come at a time of rising global inflationary pressures, underscores the FDF. With its report, it calls for “fundamental reforms” to the UK’s regulatory architecture, in order to ensure future policy is “effective and well-targeted.”

“Food and drink manufacturers are close to breaking point,” stresses Wright. “Through the last 16 months our workers have made truly heroic efforts to keep the country fed. Yet now they face a combination of challenges which threaten to deliver food price inflation to already hard-pressed households.”

Long-term impacts of additional costs
The FDF also argues that in the long-term any additional costs will likely increase indebtedness, reduce competitiveness and see investment decline, particularly at a time when businesses are seeking to recover from a difficult period of economic uncertainty.

The F&B sector is the largest industry in the UK, it stresses. “If the government is serious about levelling up it needs to incentivize the sector and not pile on extra costs. Ninety-seven percent of all food and drink businesses are SMEs, and it is they who are more greatly exposed to these risks.”

“The UK enjoys a fantastic range of food and drink at a range of price-points,” says Wright. “Our industry has done an incredible job of keeping that cost low for the last three decades.”

“But that period is now at an end. Double-digit percentage increases in food expenditure for the poorest households are highly likely in the coming years unless the government pauses to consider the consequences of its plans.”

By Benjamin Ferrer

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