The prices of many agricultural raw materials have been hitting records in recent months. However, market experts do not fear a spread of these increases in consumer prices. Explanations.
An inflation rate at its lowest for three and a half years, prices which have been falling in supermarkets for five months. The inflationary crisis is emerging from the news and is ready to join the history books.
However, in recent months, the prices of raw materials, particularly agricultural ones, have shown new signs of fever. Coffee, sugar, butter, sunflower or orange juice
Starting with butter, the spot price of which has been breaking records in recent months. Peaking at nearly 8,200 euros per tonne at the end of September (92% more in one year), the price of butter had never been so high.
Still in 2024, orange juice continues to soar. A pound of frozen orange juice concentrate crossed the $5.50 mark in New York, an increase of 175% compared to January 2023.
We can continue with breakfast raw materials with the price of sugar at its highest for six months at 23.3 cents per pound or that of coffee – mainly robusta – which has increased by 147% over the past year.
After the inflation of 2022, a consequence of the energy crisis and the war in Ukraine, are we seeing a new surge, this time linked to climate change?
All raw materials down
Because from the droughts in Brazil causing the shortage of orange juice to the poor harvests in Ghana for cocoa and the extreme heat which depresses the robusta coffee plants in Vietnam… Climatic conditions disrupt the harvests and lead to shortages.
“From time to time on certain raw materials, there can be enormous shortages, we saw this on sugar, on coffee or on cocoa recently, recalls Alain Pitous, raw materials specialist at ESG. But we also see that When one place is under stress because there is drought or a big flood, other places benefit from a mild summer.”
The expert also recalls that all raw materials remain on a downward trend in 2024, of around 10%.
Except for a few products, shortages therefore most often remain localized and are not likely to produce an overall increase in prices. We see this for example in France with wheat or butter, two productions suffering in France. This is not the case at the global level where prices remain at rather low levels.
However, even if localized and occasional, could these increases in the price of raw materials increase the prices of certain consumer products on our shelves? Again, this is unlikely, given the current state of the market.
Cheaper coffee packaging
Regarding butter, for example, it is more shortage situations like in 2017 that threaten than real outbreaks. The product being a price marker for most consumers, large stores tend to play on their margin to keep the price of butter at a low rate. During the previous butter crisis, bakers were going to obtain their supplies from large retailers to pay less, hence the shortages observed on the shelves.
But more generally, the prices of raw materials do not have a very significant impact on the prices of consumer products.
“In a 1.10 euro baguette, wheat is 7-8 cents, in a yogurt, the share of milk is 10%,” indicates Philippe Chalmin, economist and founder of CyclOpe. The agricultural share in the product we buy is extremely weak. Besides, I often say that in the Nespresso pod, the coffee is cheaper than the packaging and the brand.”
The inflationary crisis of 2022 was also caused by the rise in energy prices and in particular gas and oil which had repercussions on the entire agri-food sector. A very different situation today.
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