16/07/2007
CIAA Statement on Increased Raw Material Prices for Food Following OECD/FAO Report
CIAA – the confederation of the European food and drink industry – recognises that the recent increase of prices for raw materials, highlighted by the OECD/FAO report published last week, has led to an overall increase of food prices around the world.

The reasons for this increase in commodity prices are multifactorial and include both temporary factors, such as drought-related supply shortfalls as well as long-term and structural changes in supply and demand. Short term climate drought has pushed prices above historical level however long-term shifts, such as increasing food demand in large Asian emerging markets, increased feedstock demand for biofuel production and the reduction of support following agricultural policy reforms, have increased price volatility and may keep prices firm over time.

The OECD/FAO report entitled ‘Agricultural Outlook 2007 – 2016’ stated that “…world prices rose much more strongly in 2006 than earlier anticipated for cereals and dairy products and to a lesser extent also for oilseeds…”. This is in line with the EU food and drink companies’ experiences over the last year where prices of supplies increased by 35% for wheat, by an average 50% for dairy products, by more than 25% for sunflower oil.

“The food and drink industry will continue providing approximately 480 million EU consumers with a large variety of safe and high quality products. It must be able to have reliable supplies of agricultural raw materials at reasonable prices for the production of food and drink products,’ stated Jean Martin, President of CIAA.

CIAA will continue to look at the situation at EU level and the implications for the different sectors need to be carefully monitored and evaluated.

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