Wheat prices send meat and dairy prices soaring
By John Leonidou
CONSUMERS are to be hit hard in the pocket in upcoming months with meat and dairy prices expected to go up.
A recent chain reaction – spurred by a surge in wheat prices – has seen food products, especially meat and milk products, around the world take a sharp increase.
The problem has also affected Cyprus, with butchers complaining of extra burdens and milk industry officials blasting retailers for fuelling the existing problem with their “large profit margins”.
Costas Livadiotis, Head of the Butchers’ Association, said that by December, meat prices would rise to an all-time high, especially lamb.
“We have seen general increases for all types of meat. For example, pork has seen an increase of 7.5 per cent, beef four per cent, chicken 15 per cent and lamb also around 15 per cent.”
Livadiotis said his association had recently been informed by farming unions that because of the increase in the price of wheat – which is used for animal feed – prices would again be seeing an increase in the next few months.
Wheat prices have risen about 40 per cent in recent months with world wheat inventories headed for their lowest level in nearly three decades.
Lividiotis added that local meat prices were also being affected by a dispute over who is responsible for disposing of leftover meat at butchers.
Until recently, the disposal of animal remains at butchers’ shops was undertaken by the Municipality, but they have now handed the responsibility to the butchers themselves, leaving thousands of unhappy butchers with the extra costs of getting rid of the waste.
“We are not expecting prices to go down,” Livadiotis said. “On the contrary, they will hit an all-time high… In general, there has been an increase in meat prices worldwide because of the wheat crisis, but we are still selling meat at the lowest prices compared to most other EU states.”
Meanwhile, prices have also increased for milk, but that isn’t only due to the wheat crisis, explained the director of the milk marketing board, Andreas Marangos.
“The problem of the increases has also got to do with the retailers’ overpricing of milk,” Marangos said yesterday.
“The producer itself, who needs about a year to grow and nurture the animals, would sell the milk for 24 cents. The retailer would buy the milk in the morning and by 10am would sell it for 15 cents more. The retailer is therefore selling the milk for too much and it is not only milk we are talking about but also Cypriot dairy products.”
Marangos said the Competition Protection Committee needed to look into the matter because the latest surge in milk prices was not due to increases in wheat prices.
“The contracts [with the retailers] were signed in May before wheat prices increased,” he said. “At this moment, the producers need to sell the milk by around three to four cents more because their costs have now indeed gone up. The producers, however, are caught between a rock and hard place because of these contracts.
“If you take into account the fact that 70 per cent of the costs come from animal feed, then you can imagine the extra financial burdens on the milk producers.
“The retail companies need to lower their profit margins and also renegotiate with the milk industry. Pretty soon, we will not be able to sell milk any more.”
Copyright © Cyprus Mail 2007
Meat/dairy producers are blaming a 40% increase in wheat prices to hike their prices (as do the bakers). This is a lying scam.
1. Wheat, like all commodities, is priced in USD. Between last season's wheat crop and this one, the dollar has dropped in value from €0.799 to 0.702, a drop of 14%, so that wheat on this island, paid in € is only 26% higher, not 40%. I suspect that the percentage is even slightly less converted to CYP.
2. Flour is a component in the price of bread, but the wholesale cost to bakers of the flour in a kg of bread is about 20 c, so the increase from this cause should be only about 5 c (and far less in a sausage roll that has increased by 25 c). The increase in bakers' prices is therefore abusive,
3. Animal feedstuffs generally contain little or no wheat. They are usually made from a mixture of oilcake (the residues after pressing colza, sunflower and other edible oils from seeds), maize and some additives. OK, the price of maize has also risen (because of the demand for biofuels in the USA), but that is not relevant: the meat and dairy producers place the blame on wheat prices and that is a blatant lie.
4. Which meat has gone up the most, by 15%, according to the article? Lamb (consider this as including kid). And which animal forages for its own grazing the most? Sheep and goats, so why should the cost of wheat affect ovines and caprines the most? It's nonsense.
Consumers: be aware that you are being taken for a ride.
