Era of cheap food ends as prices surge

Steve Hawkes, Greg Hurst and Valerie Elliott

Families have been warned that the prices of basic foods will rise steeply again because of acute shortages in commodity markets.

Experts told The Times yesterday that prices of rice, wheat and vegetable oil would rise further. They also forecast that high prices and shortages — which have caused riots in developing countries such as Bangladesh and Haiti — were here to stay, and that the days of cheap produce would not return. Food-price inflation has already pushed up a typical family’s weekly shopping bill by 15 per cent in a year.

A further 15 per cent increase in the price of a standard Kingsmill loaf would push it up from £1.09 to to £1.24. Butter has gone up by 62 per cent in the past year. A similar rise would bring the price of a 250g pack to £1.52.

The price of rice, which has almost tripled in a year, rose 2 per cent on the Chicago Board of Trade yesterday as the United Nations food agency gave warning that millions faced starvation because aid agencies were unable to meet the additional financial burden.

Gordon Brown responded to mounting concerns about the global rise in food prices by signalling that he might scale back Britain’s commitment to biofuels, which critics say has exacerbated the food crisis because land has been given over to grow crops for energy rather than food.

John Bason, finance director of Associated British Foods, one of Britain’s biggest food producers, said that wheat prices had doubled in a year and supermarkets would have to raise the price of bread again. Vegetable oil was also likely to soar in price because the price of corn oil in the US had almost tripled, he said.

Poor harvests and fierce competition for food supplies has already meant the price of eggs, rice, bread and pasta in supermarkets has rocketed.

MySupermarket.co.uk said that eggs from free-range poultry in Tesco, Asda and Sainsbury’s were 47 per cent more expensive than a year ago; basmati rice was up 61 per cent and fusilli pasta 81 per cent.

At a meeting at Downing Street yesterday, Mr Brown asked farmers, supermarkets and consumer groups to agree steps to rein in rising food costs. He said that Britain must become “more selective” in how it supported environmental initiatives to counter climate change.

“If our UK review shows that we need to change our approach, we will also push for change in EU biofuels targets,” he wrote on Downing Street’s website.

Britain is now likely to press the European Union to recast its target for 10 per cent of transport fuels to be supplied from biofuels by 2020.

Downing Street sources said that ministers would press for any such target to be introduced in a more “sustainable” way and that Britain would not go beyond its own target for 5 per cent of fuels to come from biofuels by 2010. Rising food costs will pile the pressure on Mr Brown, coming after double-digit increases in household fuel bills earlier this year and the continuing row over tax increases for millions of low-paid workers.

Yesterday’s meeting on food prices also focused on the impact on developing countries of global increases in food costs, driven by higher production costs as oil prices soar and increased demand due to population growth.

The Department for International Development announced that it would allocate £400 million over five years to research into hardier and higher-yielding crops. It also promised £30 million to the World Food Programme for countries where the risk of hunger is greatest, plus £25 million in aid for Ethiopia alone.

The Government will meet consumer groups to discuss how households are coping with higher prices. Jonathan Shaw, the Rural Affairs Minister, will host the meeting next Thursday as part of a study into the impact of the higher household bills on the poorest, most vulnerable groups in society.

Opposition parties accused Mr Brown of making the squeeze on families worse.

Philip Hammond, Shadow Chief Secretary to the Treasury, said: “At a time when families are facing soaring food, fuel and mortgage bills, Gordon Brown’s response is to clobber them with higher taxes.”

Vince Cable, the Liberal Democrats’ Treasury spokesman, said: “Rising food bills will hit families already struggling to keep their heads above water following big rises to many utility bills.

“The Government must show more urgency in ensuring the current world talks on agricultural trade no longer drift hopelessly because of a lack of political will.”

The United Nations Food Agency said that rising food prices threatened to plunge 100 million people across the world into hunger.

Josette Sheeran, head of the UN’s World Food Programme, said before yesterday’s meeting: “This is the new face of hunger — the millions of people who were not in the urgent hunger category six months ago but now are.”