High food prices call for sharper management

Companies in the food chain are facing rising costs due to inflation. Food price inflation rose to a record high of 18.4% in March 2023, while general inflation stood at 4.4%. 

This is caused by delayed pass-through in the food chain and rising contract wages. "Food companies need to stay sharp on procurement, work more efficiently and pass on higher costs. Investing in renewable energy sources can reduce vulnerability to energy price fluctuations," said Ceel Elemans, ING sector banker Food.

Efficient operations

To offset incurred margin losses, food companies should focus on efficient operations. This can be achieved by negotiating prices with suppliers and customers, cutting costs and adjusting product ranges. Automation and robotisation can help reduce dependency and vulnerability due to labour market shortages, increase productivity and improve the image of the food sector.

Climate change is here to stay

Besides legal obligations, food companies also have a social responsibility. Integrating this responsibility into their business strategy is important to contribute to sustainability, achieving climate goals and reducing energy bills and dependence on energy. Many challenges are temporary, but climate change is permanent and requires follow-up steps.

Three tips for entrepreneurs

• Commit to passing on maximum cost increases in the chain and share the pain together.
• Work on cost reductions; that pays off in terms of margin development and offers room for lower recharges.
• Continue to invest in sustainability as a prominent part of your business and investment strategy.

Ing.nl