Food prices after the storm

18 March 2014
Food prices after the storm

The short-term impact on food prices of the extreme weather that plagued the UK from December to February is expected to be relatively low. However, longer-term measures required to deal with the increased risk of flooding should be more of a concern for caterers.

"Inevitably, our customers have been asking what the impact of the weather will be on their food costs," said Lynx Purchasing managing director John Pinder. "That's understandable, not simply because of the widespread media coverage of the flooding, but also because the weather is always one of the biggest variables on the supply side when calculating prices.

"Last year's prolonged cold snap and late spring is a case in point. It meant that crops couldn't be planted until later than normal, so we had to rely on imports until later in the year. That kind of weather has more impact than this year's floods which, although severe, were more localised. Of course, I'm not underestimating the concerns of a farmer who can't reach stranded livestock, let alone people whose homes have been damaged, but in general terms, the amount of farmland affected was fairly limited and, for the most part, crops can survive under water for a few weeks without any real impact on the eventual harvest."

During the period there were some short-term price spikes, such as higher prices for fresh fish during the periods when storms prevented fishing boats from going to sea, but those have largely now levelled off. Pinder added that Lynx had also had some early reports that availability of shellfish from south-west coasts is likely to be affected by storm damage to crab and lobster pots, but the extent is still being assessed.

However, there are longer-term concerns. Both the Campaign for Rural England and the National Farmers Union (NFU) have recently warned about the impact of long-term flood planning on UK food security. "If flooding is going to be regular event, then diverting floodwaters onto agricultural land is likely to play an important part in preventing water reaching homes," Pinder said. "The NFU's figures show that 58% of England's most productive farmland lies within a flood plain. We'll all have to monitor the implications for food supply in the future."


Of more immediate concern to caterers are the likely levels of food inflation over the coming months. The headline CPI measure of overall inflation was 1.9% in January 2014 - the first time it has fallen below the government's 2% target in more than four years. However, digging more deeply into the ONS figures flags up some areas of potential concern.

"Overall, the CPI rate of food inflation was 1.9% in January, but caterers tend to pay higher prices than the overall retail rate, which reflects deals and promotions by supermarkets," said Pinder.

"The RPI measure of inflation recorded a 2.9% increase in the price of hotel, restaurant and pub meals in January. The fact that the price of eating out increased in the month when operators are traditionally doing everything possible to drum up trade shows that there is some underlying volatility below the headline inflation rate."

Examples of sharp price increases include:

  • Cereals: 4%
  • Beef: 7.5%
  • Home-killed lamb: 5.7%
  • Fresh fish: 7.2%
  • Cheese: 4.7%
  • Potato products: 5.7%.

However, other produce saw rates of inflation that were much more moderate:

  • Poultry: 0.8%
  • Fresh milk: 1.8%
  • Processed fish: 0.9%.

The newly published spring 2014 edition of the Lynx Purchasing Market Forecast explains some of the factors influencing price increases. With the supply of British cattle remaining tight and supermarkets continuing to increase their demand for British beef, the forecast is that prime beef will remain on an upward price trend. The introduction of Protected Geographical Indication status for West Country beef at the end of March will also have implications for beef prices (see box).

The increase in the price of British lamb reflects the shortage of supplies at the end of the season, and while the winter has been extraordinarily wet, it has also been mild and without the usual snowfalls, even on high ground. Consequently the expectation is for spring lamb supplies to be good and prices to fall, although building towards their usual seasonal peak in April and May.

"With trade likely to be subdued right through to Easter, it's more important than ever for caterers to plan their menus seasonally and build in enough flexibility to use the best-value produce when it becomes available," said Pinder

Lynx expects UK pork to represent good value compared with other meats this spring. After hitting high levels in November and December 2013, prices have stabilised and pork now remains the most cost-effective red meat available.

Poultry is also expected to see price rises at no more than the general rate of inflation, with rearing costs under control in both the UK and EU. The availability and quality of fresh produce is also expected to be generally good this spring.

"Fish is a great option for spring menus if you pick the right species," added Pinder. "For example, plaice should be avoided until late March/early April, because until then they are full of roe and will take a few months to fatten up. Mackerel will also be in shorter supply and less good value until June. However, species in good supply that we recommend include monkfish, sardines, lemon sole and grey mullet."

Ones to watch in 2014


The industry will be closely monitoring the impact of Protected Geographical Indication (PGI) status for both West Country beef and lamb, which comes into force on 31 March 2014. This is forecast to have a significant impact on the price of West Country beef in particular due to the stringent qualifying criteria.

To qualify for West Country PGI status, the cattle or lamb must have been born, raised and slaughtered in the six counties of the West Country. This will require significant changes to the predominant beef-rearing method in the UK, where cattle are moved around at different stages of their development, so there is uncertainty as to the amount of qualifying beef that will be available.


The global market is very strong, with increasing demand from emerging markets, especially China, soaking up a significant proportion of Australasian lamb production.

At the same time, the New Zealand crop is the lowest it has been for decades following harsh weather. The expectation is that prices for frozen lamb will be strong and may rise above the peaks seen in 2012.

Both UK and New Zealand legs of lamb, which are very popular in foodservice, are on an upward curve and this is expected to continue.


Salmon prices are expected to remain under pressure throughout 2014, due to the knock-on effect of disease in some Chilean salmon farms. The North American market is sourcing more Scottish and Norwegian salmon as a result, pushing up prices.


The Early Mortality Syndrome (EMS) virus prevents prawns from digesting food and weakens them to the point of death. The disease has devastated many Asian farms and is unprecedented on its current scale.

Thailand, the world's largest producer, is dramatically down in volume, and Vietnam, China, Indonesia and Malaysia have also been severely affected. This will continue to cause supply issues, with tiger prawns in particular, probably until late 2015.

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