Fluctuating currency exchange rates have produced startling price rises for fruit and veg but other factors are also responsible, finds Richard Ford

The fruit and vegetable sector is one of the first categories to show the impact that the fluctuations in the currency markets over the past month are having on food retail prices, as the price of our basket of 12 items has risen 5.9% since last month. Iceberg lettuce, for example, which is now coming in from Spain, has gone up 14.2%. Similarly, another key Spanish import, broccoli, has risen 9.5% month-on-month. Costs of importing from Spain have shot up, not only as a result of fluctuating currency exchange rates but also because of a reduced acreage of Spanish broccoli, coupled with a bout of very cold weather.

Two months ago we reported that broccoli had dropped by 25.9% in price compared with last year, which was largely due to an unusually high price in September 2007 caused by the bad weather (The Grocer, 27 September 2008).

However, this month's year-on year change in the retail price of broccoli is far more modest, standing at just -0.9%.

Oranges, the only citrus fruit in the basket, have gone up 13.2% in price. Strong demand and good quality of fruit in the southern hemisphere over the past year have pushed up the price commanded by growers. This, in turn, has had a knock-on effect on European-grown oranges. In addition, the cost of transporting oranges has also increased, with one citrus importer estimating a rise of 15% to 20% in transport costs.

The banana price, which has increased 6.7% month-on-month, is also "indicative of the continuing price pressures that come from the devaluation of the pound" said one banana industry figure. Such is the competition within the banana industry that bananas are less closely linked to the costs of production. "The percentage increase in banana prices is not linked to anything to do with production costs," he added.

The onion category has shown the second-highest increase in price this month, at 31%, which has led to accusations by some growers that middlemen and retailers have been taking a bit more profit. However, higher fertiliser and diesel costs have also been a factor.

This month Brussels announced that member states had voted in favour of repealing EU marketing standards for 26 varieties of fruit and vegetables such as carrots, cucumbers, onion, and cultivated mushrooms (The Grocer 15 November 2008). This could have a deflationary impact on prices with more fruit and veg on the market.

However, producers claim the amendment to the rules will not have a dramatic impact on the amount of fresh produce they will now be able to sell and will not bring onion prices down. "None of us go out wanting to grow broken or bent carrots," said one supplier. He stressed that vegetable growers had invested millions in recent years to improve the quality and consistency of their produce.

The same supplier said he was already having to use 20% of his class 1 carrot crop in order to fill his 'value pack' orders. He argued that while premium carrots had increased in price, the price of value carrots had not shown much movement in comparison. He added that sales of value packs had increased noticeably.