Tsunami of expected price hikes

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High fuel costs, shipping costs and feed combined to see food prices skyrocket

Essential food items like bread, milk and meat could see prices spike by up to 20% in the coming weeks and months, according to industry insiders. Several factors – disrupted supply chains due to Covid-related measures, fuel spikes – have merged to form a cascading effect, and no one can venture to guess when the problems will turn around.

Farmers last week warned of skyrocketing costs for feed and grains for human consumption. Animal feed increased 50 percent while wheat soared 30 percent, impacting the price of bread and pasta. The hikes will have a ripple effect on milk, cheese, eggs and meat. Bread and pasta are expected to increase by 15 to 20 percent, cereals by 20 percent, flour by 11 percent, coffee by 7 percent, and LPG gas cylinders by 10 percent.

Domestic grain production has also declined this year due to weather conditions.

Data published by the statistical service showed that in September, in the category “housing, water supply, electricity and gas”, prices increased by 14%, transport by 11.5% and food and drink not. alcoholic beverages of 1.47%. Headline inflation also rose in September.

The Cypriot Farmers Union, a union affiliated with Akel, has made much of the shutdown of the state-run Grain Commission. Cut off last year, the Grains Commission was the entity that negotiated for grain imports and – at least on paper – also ensured the best prices. Farmers are now said to be at the mercy of the free market, which has seen prices skyrocket for the past 12 months or so.

“Production costs are on the rise for meat and milk. Unless the situation is corrected, a tsunami of price increases is on its way, ”union leader Panicos Hambas told the Sunday Mail.

Andreas Hadjiadamou, general manager of the Cyprus Association of Supermarkets (Pasype), said the prices of goods had skyrocketed in the past two months, but to date retailers have been able to absorb that – thanks to lower profit margins.

“So far, with more expensive electricity and fuel, supermarkets have tried not to pass the increased operating costs on to consumers. But now everything is falling into place at the same time – increased grain, supply chains, etc.

Hambas explained that the Grains Commission had been tasked with maintaining strategic grain reserves – precisely in case of unforeseen circumstances. After the entity was abolished, a new law was passed in March, introducing a new reserve system, but lax monitoring by the Ministry of Agriculture allowed grain merchants to get away with it.

“When you have shortages, you throw the reserves into the market to temporarily lower prices. But now we can’t do that. This is why the Minister of Agriculture is considering issuing a decree requiring traders to retain (not sell) 4% of imports.

He added: “If I remember correctly, this is the first time that the Minister of Agriculture of Cyprus has done something like this.

But with about 90 percent of grains made up of imports, it is unlikely that drawing on strategic reserves would have made much difference other than a short-lived reprieve.

Still, Hambas insists that Cyprus could have weathered the storm had it stocked up on grain. “But unlike others – like China – we didn’t.”

Suppliers are telegraphing retailers to expect more expensive deliveries in the coming weeks, Hadjiadamou said.

“Although very difficult to pin down, based on the signals we are receiving, we expect on average an increase of around 7 to 20% on certain foodstuffs – bread, flour, pulses – and of 3 to 5% on non-essential products. “

He focused on shipping costs: “A year ago, a container from China would cost, say, € 1,700. For today, I have heard up to € 17,000.

Although he is not an expert in shipping, Hadjiadamou attributed this to shipping operators playing with the industry.

“We’re basically talking about a cartel… five or six big companies controlling the trade. “

What about the meat? Could the basic pita kebab become a delicacy for some?

Relatively self-sufficient in meat in the past, the island currently imports 20 to 25 percent.

During the week, and speaking to the Sigma chain, the head of the butchers’ association Costas Livadiotis predicted that prices would rise by 20% over the next six months.

Yet for now, prices for meat products remain stable, in part because large numbers of animals have yet to be slaughtered due to weaker than usual demand – less than tourists over the past year, plus the closure of a number of restaurants due to the Covid Restrictions.

At the same time, ocean freight rates have skyrocketed this year as demand for goods picked up after the pandemic triggered a sharp drop in all sectors. The disruption caused by the closures and the shortage of workers and containers have only made matters worse.

According to Global Trade Review, on routes such as from Shanghai to Rotterdam, “Freight prices have increased 570% in the past 12 months. The shipping of a container from the Chinese city to Genoa increased by 509% for the same period.

Cyprus – which imports up to 95 percent of consumer goods – could not help but feel the pressure.

“Freight rates from China are sky-high, six times higher than before Covid, and double or triple other routes like Europe,” a shipping industry source said.

The cargoes imported to the island come mainly from Greece, Italy and China.

The Cypriot businessman, who preferred to remain anonymous, said Cyprus imports most of its grain from Ukraine and part of Serbia.

When asked why the rising shipping costs, the same source attributed it to the growth in traffic on the trans-Pacific routes – from China to ports on the west coast of the United States.

“Supply and demand … less traffic on other routes.”

And although freight has leveled off somewhat in recent weeks, advice from shipping operators suggests it will pick up again in November.

“Recalibration of marine traffic, more expensive fuel… a lot is at stake. I expect the trend to continue next year.


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