PTT: Food prices to rise sharply next year – rising costs and poor yields will stifle agriculture | Yle news

This year’s poor harvest and rising costs are eroding the profitability of agriculture. Prices for fertilizers, feed and construction have risen. Pork producers are in a difficult situation when exports to China do not pull.

According to PTT, the increase in consumers ‘purchasing power makes it possible to pass on the increase in producers’ costs to prices. Photo: Tiina Jutila / Yle

The price of food will start to grow strongly next year, predicts Pellervo Economic Research (PTT). Prices will rise by 1.8%, which is more than the projected general rise in consumer prices.

– The rise in food prices in Finland will be moderate in 2021, about 0.3 per cent, but it will start to accelerate towards the end of the year, estimates PTT’s research director Sari Forsman-Hugg in the bulletin.

According to PTT, the increase in food prices is due to rising costs. At the same time, consumer purchasing power is rising with wage increases, which makes it possible to pass on cost increases to prices.

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This year’s poor harvest and rising costs are eroding the profitability of agriculture. In particular, the prices of fertilizers, feed and construction have risen.

– Entrepreneurial income in agriculture will fall dramatically this year, by as much as one-fifth, and next year the decline will be eight percent, Forsman-Hugg says.

All grains, especially barley, have suffered from the dry spring and toasty summer. Livestock farms can become short of feed grains, and wheat, for example, has little to export.

– A poor harvest will further increase the price of feed and increase the cost of livestock farms. At the same time, for example, the prices of fertilizer raw materials have even doubled, says PTT’s senior agricultural economist Päivi Kujala.

Instead, the food industry is already recovering from the slump in the Korona era as economic growth and demand strengthen. The volume of production and the turnover of companies will recover, which will also be affected by the lifting of restaurant restrictions and the increase in various events.

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Pork producers in trouble

PTT predicts that total meat consumption in Finland will continue to decline. Beef consumption is falling slightly. In pork, the drop is steeper.

In contrast, consumption of poultry meat continues to rise relatively steadily. According to the forecast, consumption of poultry meat will exceed consumption of pork next year.

Pork producers are in a particularly difficult situation. Production has increased in recent years as exports to China have increased.

Now China is no longer pulling as before and there is an oversupply of pork in the EU as well. At the same time, pork consumption is declining, but costs are rising.

– The gap between production and domestic consumption is widening, but production cannot be adjusted very quickly. On the other hand, a decrease in production would only drop the entrepreneurial income more and more. New export destinations should be found, but it is difficult when there is an oversupply in the EU, says PTT’s agricultural economist Juuso Aalto-Setälä.

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