Food price rises inevitable
State aid on feed still not enough to cover cereal price rises
Andrews and KPH are seeking alternative sources of maize and barley in an attempt to keep as low as possible the increases in the prices of feed.
"The purchase of non-EU maize could save over €25 a ton, even taking into account the Common External Tariff that would have to be paid because the produce comes from outside the EU.
"But even if we succeed, further feed prices increases are still inevitable because the costs worldwide have gone up by so much," Andrews general manager Peter Gatt explained.
"EU regulations limit the use of genetically-modified organisms for food and fee use and import restrictions do not allow advantage to be taken of the current $45 per ton discount on GM-corn..."
Corn prices reached an 11-year high this month, while wheat prices are the highest they have been since 1996.
The increase in feed prices will trickle down through the production and processing chain and will cause rises - albeit of just cents - in the price of chicken and eggs, milk and cheese, pork, ham and bacon, and beef. Nevertheless, the overall impact on the average shopping basket may be big enough to affect some sectors of society.
The government has just announced that it will be giving a subsidy of €30 per metric ton on imports of maize and barley between July and December (it gave €40 on maize and €30 on barley for the first six months of this year, and has increased from the original budget of €18 for the second half of the year) - but this will only cover a third of the increase seen since the beginning of the year.
"This could not have come at a worse time as people are already very concerned that there may be price rises because of the introduction of the euro - but in fact, it has absolutely nothing to do with it," he said.
Indeed, the international press is full of stories of price rises in various foodstuffs, from Dairy Crest in the UK which is saying milk will go up by 15 per cent, to Aldi, a German food retailers, which said milk products could go up by as much as 50 per cent next month.
The government has been caught between a rock and a hard place. It had negotiated a decreasing regime of state aid for cereal imports, meant to cover the fact that cereal in the EU cost more than that from outside its borders. However, the differential resulting from the Common External Tariff has been shrinking and now stands at just €10 per ton; it is expected to be wiped out completely by next month.
"The government fully appreciates the social sensitivity of the sector but it is bound by state aid rules. Cabinet first asked to see our (Andrew's and KPH's) accounts to see how the increases were affecting us. And the figures speak for themselves. We have raised prices incrementally a few times this year - but always less than the increases of the cereal prices. Our parent company in Northern Ireland has also had to raise its prices three times so far this year.
"Once the government verified that our situation was untenable and that we were losing money, Cabinet approved the proposal drawn up by the Rural Affairs Ministry, to redirect some extra state aid funds from other products that are not as socially relevant. But it remains to be seen whether it can still give us the state aid if we buy from outside the EU.
"We hope so as the European Commission is well aware of the pressure that the massive increases are having on the cost of living. In fact, it is no longer paying farmers to set aside land as it realises that Europe needs to plant more corn. But it will take at least a year till that comes to harvest..." Mr Gatt said.
He offered advice to Maltese consumers: Buy fresh and buy local.
"We have to realise how important it is for local food supplies to be secure and guaranteed as far as possible. By supporting the local sector, we help to ensure its survival, which is in everybody's interest."
"The purchase of non-EU maize could save over €25 a ton, even taking into account the Common External Tariff that would have to be paid because the produce comes from outside the EU.
"But even if we succeed, further feed prices increases are still inevitable because the costs worldwide have gone up by so much," Andrews general manager Peter Gatt explained.
"EU regulations limit the use of genetically-modified organisms for food and fee use and import restrictions do not allow advantage to be taken of the current $45 per ton discount on GM-corn..."
Corn prices reached an 11-year high this month, while wheat prices are the highest they have been since 1996.
The increase in feed prices will trickle down through the production and processing chain and will cause rises - albeit of just cents - in the price of chicken and eggs, milk and cheese, pork, ham and bacon, and beef. Nevertheless, the overall impact on the average shopping basket may be big enough to affect some sectors of society.
The government has just announced that it will be giving a subsidy of €30 per metric ton on imports of maize and barley between July and December (it gave €40 on maize and €30 on barley for the first six months of this year, and has increased from the original budget of €18 for the second half of the year) - but this will only cover a third of the increase seen since the beginning of the year.
"This could not have come at a worse time as people are already very concerned that there may be price rises because of the introduction of the euro - but in fact, it has absolutely nothing to do with it," he said.
Indeed, the international press is full of stories of price rises in various foodstuffs, from Dairy Crest in the UK which is saying milk will go up by 15 per cent, to Aldi, a German food retailers, which said milk products could go up by as much as 50 per cent next month.
The government has been caught between a rock and a hard place. It had negotiated a decreasing regime of state aid for cereal imports, meant to cover the fact that cereal in the EU cost more than that from outside its borders. However, the differential resulting from the Common External Tariff has been shrinking and now stands at just €10 per ton; it is expected to be wiped out completely by next month.
"The government fully appreciates the social sensitivity of the sector but it is bound by state aid rules. Cabinet first asked to see our (Andrew's and KPH's) accounts to see how the increases were affecting us. And the figures speak for themselves. We have raised prices incrementally a few times this year - but always less than the increases of the cereal prices. Our parent company in Northern Ireland has also had to raise its prices three times so far this year.
"Once the government verified that our situation was untenable and that we were losing money, Cabinet approved the proposal drawn up by the Rural Affairs Ministry, to redirect some extra state aid funds from other products that are not as socially relevant. But it remains to be seen whether it can still give us the state aid if we buy from outside the EU.
"We hope so as the European Commission is well aware of the pressure that the massive increases are having on the cost of living. In fact, it is no longer paying farmers to set aside land as it realises that Europe needs to plant more corn. But it will take at least a year till that comes to harvest..." Mr Gatt said.
He offered advice to Maltese consumers: Buy fresh and buy local.
"We have to realise how important it is for local food supplies to be secure and guaranteed as far as possible. By supporting the local sector, we help to ensure its survival, which is in everybody's interest."