Premier Foods says biofuel puts 'green tax' on bread
Premier Foods has blamed an "unprecedented" surge in global wheat costs
for a decision to increase bread and flour prices for the second time
The group, home to the Hovis and Mothers Pride brands, refused yesterday
to reveal the extent of the increase. However, Tesco immediately put the
price of a 800g loaf of Hovis up by 8p to more than £1. It was 88p last
Robert Schofield, chief executive of Premier Foods, said that the group
had no choice but to force through an increase as wheat prices had
doubled in the past year to £200 a tonne after a series of poor harvests
and Britain's wet summer.
Bread prices went up by 5p to 6p in February but wheat has continued to
climb on global markets. Wheat prices rose to records yesterday. In
Europe, a tonne of milling wheat for November delivery cost €282.
To eat . . . . or to drive?
Farmers all over the world are finding a sudden boom in demand for their
crops – but as fuel for cars rather than as food
Ice-cream makers hit by corn price rises
The price of milk in the US has surged to a near-record, in part because
of the increasing costs of feeding a dairy herd
* Milk price soars as drought hits dairy industry
* British dairy farmers on way out too soon to milk higher prices
* Tempus comment: Food for thought
* Premier Foods axes six factories and 600 jobs
* Warning bells as the cost of bread rises
Mr Schofield said that a further price rise on bread and flour may be
necessary before the end of the year. He added that other food products
were also facing inflationary pressure in part because of the desire by
governments to clear more farmland for biofuel products.
"Everyone is focusing on wheat and bread prices at the moment, but there
is a general food inflation that hasn't been with us since the 1990s,"
Mr Schofield said. "As long as governments are going to grow fuel, there
will be, in effect, an environment tax on food."
Half-year results showed that profits at Premier's Bread Bakeries unit
halved to £19 million to June 30. Pretax profits fell nearly 50 per cent
to £13.9 million.
However, turnover more than doubled to £899 million given last year's
acquisitions of RHM and the UK arm of Campbell's Soup.
The shares, down 28 per cent since February, closed up 10½p at 251p. Mr
Schofield bought stock worth £123,500 yesterday.
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