Energy costs raise prices throughout meat chain

ROCKETING ENERGY costs are hitting the livestock sector hard, as both feed manufacturers and meat processors warn of higher prices.

The Agricultural Industries Confederation was first out of the blocks, warning farmers of average animal feed price rises of £1.10/t.

The value represents the hike in electricity costs for milling feed over the past 18 months, as a megawatt hour has gone from £22 to £40.

“To date, feed manufacturers have been absorbing the increased costs, but this cannot continue indefinitely,” said David Caffall, chief executive of AIC.

“If the market does not change, the costs will have to be passed on to the customer. Manufacturers do not want to raise their prices, but they may be forced into doing so.”

Though energy supplies are purchased months or years in advance at fixed prices, he added, fluctuating markets made choosing the right time to buy a very tough task.

At the other end of the supply chain, meat processor Grampian Country Food Group is looking to secure a 6% price rise across all its meat products from customers.

The company has already started negotiating with major retailers to secure the rise.

Philip Wilkinson, managing director at the group’s chicken unit, said the business was facing cost increases of 3% on fuel, 2% on feed and 1% on packaging.

But he promised that the firm’s farmer suppliers would receive up to a third of any retail price increases achieved.