Ukraine crisis ‘a long-term threat to food prices’

The Russian invasion of Ukraine will have an ongoing impact on hospitality food prices and is likely to end any hopes that spiralling food inflation is just a blip, buying specialist Lynx Purchasing has warned.

"We've all witnessed the horrifying events in Ukraine, and hospitality operators and their customers understand the tragic human cost driving the need for sanctions," said Lynx Purchasing managing director Rachel Dobson, “but it's also important that they plan for the impact of the invasion, and the measures to oppose it, on their businesses”.

The warning comes as Lynx published the Spring 2022 edition of its best Market Forecast to help customers plan for a trading season that includes Easter, the May Bank Holiday and the Platinum Jubilee celebrations.

As well as the increase in energy prices, higher fuel costs will be driven by spikes in the price of oil, which suppliers will factor into prices charged to operators. The business warned that Ukraine supplies 60% of the world's sunflower oil, and the loss of this will inevitably lead to cost increases. Vegetable oil prices were already reported to have reached an all-time high in January, mainly due to global weather challenges, including drought in South America.

The cost of poultry feed is also one of the biggest factors in the price of poultry, and so the loss of grain from both Ukraine and Russia will have “a significant impact” on prices, according to Lynx. In addition, Ukraine and neighbouring countries such as Poland, which are facing disruption due to the invasion, are major processors of poultry.

Dobson added: "While we all hope that the immediate crisis can be resolved quickly, the impact of both the war itself, and sanctions, mean that operators will now have to budget for high prices for some time to come; at the very least for the rest of this year.

"The best advice to operators is to plan for costs that can't be controlled and focus on those that can – one of which is purchasing. Best practice includes planning menus well in advance and consolidating orders to meet free delivery and minimum value thresholds. Our advice is to order early, keep speaking to suppliers about availability, and keep menu descriptions flexible to allow for changes if needed."