Food sector sees costs rising again

Tensions surrounding Iran are starting to be felt in the Dutch food industry. Energy prices are rising and international trade routes are under pressure. That translates into higher costs for producers. Companies with energy-intensive processes in particular are being affected.

Energy costs are rising

Energy prices have risen rapidly since the end of February. The gas price for delivery next month on the TTF market increased from about €32 to roughly €59 per megawatt hour. Oil also became more expensive, climbing from around $73 to nearly $120 per barrel. For the food industry, this simply means higher production costs. Industrial bakeries and companies processing fruit and vegetables in particular use large amounts of energy. As a result, price increases tend to be felt there more quickly.

Most companies operate with different energy contracts. Because of this, price increases do not immediately show up fully in financial results. The effect may appear with a delay. The same pattern occurred during the energy crisis of 2022. At that time, rising production costs typically only became visible in consumer prices three to nine months later.

Trade and logistics are becoming more expensive

Energy is not the only factor at play. Logistics costs are also rising. Container prices are increasing due to higher oil prices and disruptions in international trade. Products that rely heavily on trade outside the European Union may face additional impact. Examples include meat, coffee, sugar, dairy, and tropical fruit and vegetables. When transport becomes more expensive or delays occur, the effect runs directly through the chain—from producer to retailer.

Packaging and raw materials increase in price

Raw materials are also reacting to higher energy prices. Plastics are becoming more expensive because oil is a key feedstock. In addition, production requires large amounts of energy. For food producers, this means higher packaging costs. If energy prices remain elevated for longer, that pressure could increase further.

The direct export impact appears limited. Each year, the Dutch food and beverage industry exports more than €2.9 billion to the Middle East. That represents roughly 2.8 percent of total exports. Chocolate, dairy, and fruit and vegetables stand out within that trade.

Abnamro.nl