Grievous policy harm
Is it a pre-emptive strike? The Food and Drink Federation (FDF) has warned that consumers will inevitably face higher food and drink prices if manufacturers are forced to absorb the cost of proposed government policies during the next few years.
I don’t blame the FDF. Why not? A week after the National Food Strategy’s recommendations, the UK government has the eyes of the general public and others on it. Action looks inevitable. A white paper is due in six months so it makes sense to put the case forward that if many of the recommendations make it into law there will be consequences.
In the report, entitled ‘Eating into household budgets: the government’s recipe for food price inflation’, the FDF has estimated that if the cost of forthcoming government policies were passed on directly to consumers, it would increase the price of food and drink shopping per household by more than £160/year.
What’s more, it suggests poorer socio-economic households would see their shopping bills increase by 11%, the same proportion of their entire food shop which is currently spent on fresh vegetables.
According to ONS estimates, a household of one adult and one child in the poorest 10% by income spends £45/week on food and drink, meaning the government’s proposals could lead to an increase in food and drink spending of nearly 7%.
Food and drink makers have worked, and are still working to adapt to changing consumer demands. There’s little left to give in terms of margin if policies make it onerous for them to remain in business.
The FDF calculated that the cost to the food and drink industry of proposed UK government policies around public health and sustainability is at least £8 billion.
The policies include the reforming of Extended Producer responsibility for the disposal of post-consumer goods (£1.7 billion), a Deposit Return Scheme on food and drink packaging (£850 million), and the introduction of promotional restrictions on HFSS foods (£833 million).
The FDF is calling on the government to reconsider these policies and their unintended consequences, as well as fundamental reforms to the UK’s regulatory architecture, in order to ensure future policy is “effective and well-targeted.”
It also argues that in the long-term any additional costs will likely increase indebtedness, reduce competitiveness, and see investment decline.
Food and drink manufacturers have been creative for years. It’s time government understands what it takes to produce the food and drink they see at a range of price-points and for it be creative with policies coming down the road.
- Rodney Jack, editor, Food & Drink Technology.
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