The war in Ukraine risks driving “hyper-inflation not seen for 50 years” and poses a “major threat” to the UK’s food security, 2 Sisters Food Group has warned.
With a raft of global commodity prices soaring in the wake of Russia’s invasion of its neighbour on 24 February, the food giant today warned food price inflation could rocket to as much as 15% by the middle of the year – dwarfing original estimates of about 5%.
Input costs for chicken production had already risen by 50% over the past 12 months, said 2 Sisters CEO Ronald Kers, on the back of existing inflationary challenges.
However, these costs would likely rise even further over the coming weeks, he suggested, in light of the “unfolding Ukrainian agricultural crisis”, which could have massive repercussions for global commodity supplies.
“This conflict brings a major threat to food security in the UK and there is no doubt the outcome of this is that consumers will suffer as a result,” he warned.
“Our business is heavily dependent on a stable agricultural sector, but we cannot isolate ourselves from events abroad, even if Ukraine seems like a faraway place,” he added. “Commodities like animal feed and CO2 are vital for us.
“Our chicken doesn’t arrive on dinner tables without farmers. In fact, with no agriculture, there’s no business for us. Our concern is that a lot of people haven’t realised the food production clock is ticking.”
Ukrainian farmers should be sowing crops in March, but “instead they’re fighting for their country”, he said.
“If this war is not stopped now, the UK could experience a major drop in supply of products like wheat, barley, corn, rapeseed, and sunflower oil. So a European supply chain issue escalates to become a global commodity price crisis, and none of us can escape this.”
These pressures were piled on top of “the acute inflationary environment we already have”, which 2 Sisters and other major food suppliers warned of last autumn, Kers pointed out.
Back then, he warned that suppliers faced “massive inflationary challenges” on a number of fronts, as he called on buyers to pay more for 2 Sisters products – due to the soaring cost of labour, transport and feed.
With these costs now accelerating even further, Kers called for “cross-territorial collaboration food security strategies to bring some order amongst the chaos”.
“The reality is companies like 2 Sisters trade globally, and the smooth flow of trade links between states are vital,” he said. “Without measures to isolate states from food security risks, ultimately there will be less food and higher prices to pay, with the poorest in society hit hardest.”
Kers’ warnings were echoed this week by Swiss-based foundation the Global Alliance for Improved Nutrition (GAIN) which warned the war had “shown the fragility of depending on a few breadbaskets: there need to be many”.
It added: “The loss of food production and exports from Ukraine (and to some extent Russia) will push world food prices up as the lack of supply fails to meet demand. High energy prices due to the loss of production, trade and the sanctions imposed will do the same, making food production, distribution and preparation more costly.”
It comes as the UN’s Food and Agriculture Organization last week warned agricultural commodity prices hit an “all-time high” in February, with a 24% year-on-year jump in its monthly food price index.