Commodity Online
ST.LOUIS (USA): Even when recession intensifies, don't be surprised if global food majors continue to raise prices and the cost of an upmarket restaurant meal may continue to rise. There are several reasons why global food majors may be forced to raise prices according to Solae, the world leader in soy-based innovative technology and ingredients.
Most food companies are affected by record-high increases on inputs, including raw material, energy, transportation, packaging and labour.
Some of the global dynamics affecting food companies cited by Solae are:
-- Increased global demand for protein is placing pressure on agricultural and food markets. Middle classes are taking hold in China, India and Latin America, and those families are including more meat and dairy in their diets, forcing those industries to step up production.
-- Higher commodity prices increase feed costs for the livestock and dairy industries, impacting the meat and dairy protein markets.
-- While grain prices have declined over the past few months, this year's soybean crop prices are still nearly double what they were in 2005 and are anticipated to continue rising in 2009.
-- Protein levels from this year's North American soybean crop are significantly lower than in previous years, dramatically impacting our input costs and reducing factory capacity. While Solae is accelerating network capacity programs to mitigate the reduction in effective capacity and maintain its commitment to support the growing demand for soy protein, there is no near term solution for how to avoid the cost increase impact.
Michele Fite, Vice President, global strategy at Solae said that his company is also not immune to these pressures and the new pricing is critical to their business.
With more than 1,000 products used by more than 3,500 customers, Solae's soy ingredients are enjoyed by consumers around the world in products such as baked goods, beverages, nutrition bars, meats, vegetarian meals and much more.
Headquartered in St. Louis, Missouri, USA, with annual revenue exceeding $1 billion, the company was formed through a joint venture between Bunge Limited (NYSE: BG) and DuPont (NYSE: DD).
Meanwhile, Hormel Foods Corporation, a leading US listed company which saw its quarterly net earnings fall 32 percent said that volatility in both commodity markets and consumer buying pattersn has caused rapid changes in the economic situation for many US producers. Spikes in raw material costs and the trend toward more at-home dining has impacted the business.
(Courtesy: Marketwire)
