Food price rise affects UK restaurant menus
Food price rise affects UK restaurant menus
UK restaurants have slapped a surcharge on the cost of steaks and dropped popular dishes from their menus as they pass on soaring food costs to their customers.
Owners say the rising prices of staples such as rice, beef and chicken are forcing them to cut the size of portions, use more vegetables and re-write recipes to drop expensive ingredients.
Fish not fowl: Le Raj restaurant owner Enam Ali has introduced pangush fish as a cheaper alternative to chicken
A fillet steak surcharge of several pounds has been added to some menus. Other casualties include mozzarella cheese and chicken tikka biryani, while smoked mackerel is being offered as a cheaper alternative to salmon.
Skimping on side orders is another survival strategy being adopted, with extras such as coleslaw disappearing from plates.
Despite these measures, market analysts said they expected the rate of restaurants going out of business to increase with rising costs - accounted for largely by ingredients - already wiping out the average caterer’s profit margin.
Miles Quest, of the British Hospitality Association, which includes the Restaurant Association, said: “High food prices are certainly affecting the industry. I think most caterers are trying to change the menus to reflect this. But where you are serving steak, the only option is to have a smaller portion.”
Rising grain prices affect the price of bread and pasta, but also have an impact on meat and dairy prices, with feed wheat prices up more than 80 per cent since April last year.
Vince Margiotta, director of Il Forno Italian restaurant in Liverpool and Sapporo Teppanyaki in Liverpool and Manchester, said they had added a £2.50 extra charge on their menus for customers ordering fillet steak.
“We’ve had a significant increase on fillet and I’ve had to pass that on [to customers],” Mr Margiotta said. “I’ve altered the pricing on the menu with £2.50 on top of the £17.75 list price in an addendum. We have added other cuts of meat to our weekly specials menu.”
Rice has seen the most dramatic price rises, with several major rice-growing countries in south-east Asia in effect banning exports to keep prices low for the home market. Basmati rice is the only type coming out of India and now costs British wholesalers about £1,000 a ton, up 100 per cent since April last year.
Long-grain rice from Thailand has risen 60 per cent in the last 2½ months.
Enam Ali, chairman of the Guild of Bangladeshi Restaurateurs, said in 30 years in the business he had never known anything like the recent rises in food prices.
Mr Ali, who owns the award-winning Le Raj restaurant in Epsom Downs, Surrey, said
in just six weeks the price he paid for 44lb of rice had doubled from £18 to £36, while the cost of 22lb of chicken fillets had risen from £25 to £32.
The cost of a range of other ingredients, including ghee and spices, had also gone up dramatically.
As a result, Le Raj’s chicken tikka biryani dish will be dropped altogether - charging a market rate would see it rise from £12.50 to about £18.
Chicken tikka massala is staying on the menu, but will rise from £8.50 to £9.50
Tengamita, another chicken dish, is to increase in price from £8.50 to £11.95 while special rice is to rise from the loss-making price of £3.65 to £4.50 or £4.65.
“The rice is a really big problem because 99 per cent of our customers eat rice,” Mr Ali said. “I am going to start changing some dishes because I’m losing money. I thought the market would get back to normal, it might be temporary - that’s why I haven’t increased prices - but now I have to, it’s going up and up. It’s not stopping.
He is bringing in pangush, a popular Bangladeshi fish dish, and a chicken kebab mixed half-and-half with vegetables as more affordable options. But some businesses, instead of changing the menu, are choosing to serve less.
A catering industry insider said: “We’ve heard that people are taking away the little embellishments - fish and chips might now be missing the coleslaw. People are taking some of the bigger cuts of meat off the menu. Where before you might be offered a 4oz and 8oz steak, now you can only have the 4oz.”
Peter Backman, managing director of the catering industry analyst Horizons, said businesses were being forced into making changes at a time of very stiff competition.
“People are reformulating their menus. One of the solutions is replacing more expensive things with cheaper things,” he said.
Chantelle Ludski, who is the founder and chief sandwich maker of the London-based company Fresh! Naturally Organic, has come up with several new sandwich recipes to stave off the worst effects of the rising cost of supplies.
She has decided to replace her roast beef, mozzarella, pesto, tomato and rocket sandwich with a similar one, but using British smoked cheddar and a home-made, sun-dried tomato pesto to keep the cost down to £2.65.
“It’s just tweaking the ingredients. You might say we would do that anyway, but we have also been doing it with an eye to the cost of ingredients,” Miss Ludski said. However, some price rises have been inevitable, with an egg sandwich up from £1.90 to £2.05.
But Ian Brown, head chef of Glasgow’s Ubiquitous Chip restaurant, said it was not necessarily a bad thing if higher costs meant restaurateurs were looking at cheaper cuts of meat. “It takes more skill to use the cheaper cuts,” he said.
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Complaints rise along with the price of rice
Thais will have no option but to pay more for their staple food as the price of rice on the world market has more than doubled in the past few months.
As the world’s largest rice exporter and a net food producer, there has been no domestic shortage of rice, but many farmers now hope their harvests can generate more profit in line with the rising global rice price.
As a result, domestic consumers - particularly middle-class people with a fixed income - will soon be hurt by higher food expenses.
Ladda Suansoong, 53, a vendor at the Trok Mor fresh market across from the Interior Ministry, says she had to raise her prices for the first time in five years - from Bt5 for two cups of parboiled rice to Bt7.
Rice prices are reaching Bt340 per 15-kilogram tank for 5-per-cent white rice, and Bt450-Bt500 per tank for jasmine rice - from the previous lows of Bt160 and Bt220 respectively.
“Despite consumer complaints, I couldn’t maintain my business if I didn’t hike prices now,” Ladda said.
Most of Ladda’s customers have a fixed salary so they complain about price increases.
Ladda is not sure why Thais have to pay more for rice as the country has long been the world’s biggest exporter.
“I’m just a small retailer so I don’t know about the government’s policy on rice, but I could feel that it’s more difficult to make ends meet for the common folks.”
Ladda has been a food vendor for more than 15 years, steaming up 45 kilos of rice a day, but she has no surplus fund to stock up rice for a long period to avoid the unrelenting price rises.
Usaporn Lapphonepoon-tawee, another food retailer in Bangkok’s Phra Nakhon district, said she had to increase the price of plain rice from Bt5 to Bt7 per plate this month as costs have climbed.
Last month, she only had to pay Bt990 per 50-kilo sack, but that soared to Bt1,100 in only one month.
“Some consumers understand why the price has increased, but they still grumble that they have to face a burden passed on by the sellers,” she said.
Since low-income people are now having a tough time economically, she wants the government to help by controlling the domestic rice price.
Another food vendor in Nonthaburi province said his kiosk had to keep prices unchanged to keep customers, despite the higher cost of rice supplies.
“I don’t know what the government is doing about the economy, but as a poor person I would like the government to take care of my plight. The government shouldn’t just serve the rich, who are shareholders of large companies, or the farmers to win popular votes,” he said.
Many Thais have also been confused about frequent policy changes as far as rice is concerned and hope that the interest of all stakeholders will be served.
Unfortunately, the plight of low-income consumers and small food vendors was hardly the focus of the Commerce Ministry’s last meeting on the rice issue.
In fact, the Commerce Minister was whetting his lips last week in anticipation of a huge windfall (but for whom?) pronouncing the Govt wouldn’t release any stored rice for domestic consumption from the Govt reserves.
One assumes they were looking forward to hoarding (driving up prices further;) and then selling at massive profits ABROAD (mostly accrued from farmers at formerly depressed prices)…
Few would argue, the farmers themselves are the one’s whom deserve a long-overdue profit. The Thai Govt is leading farmers by example - fanning the flames of the current famine-hype (in effect, creating reality) by hoarding rice reserves and opportunistically driving up prices.
Meanwhile, the PPP in effect are ’serving’ a cynical lesson in opportunism to impoverished voters whom form their rice-basket of support… at least many of whom would have allegedly received at least a few satang for their support, which should help off-set the inevitable…(??)
Lost: 200,000 tonnes of rice
Government sources said on Monday $100 million worth of rice has gone missing from national warehouses.
At the same time, rice farmers who still have stocks have openly hoarded the staple, refusing to sell their reserves in a market where prices continue to rise.
Official Thai News Agency, quoting Benjamas Kotenongbua a Bank of Thailand official “deeply acquainted with the rice trade” reported that increasing rice prices in the local market have prompted numerous farmers and middlemen to slow, stall or simply stop selling paddy rice to millers, a move which eventually affects exporters.
Ms Benjamas said a total of 200,000 tonnes of rice is missing from warehouses nationwide. Damages were estimated at approximately 3.2 billion baht, about US$101.1 million.
The government has 2.1 million tonnes of rice in stock to ensure supplies to the local market. This is less than half of the stockpile held last year, which was about 4.4 million tonnes.
The government-sponsored mortgage programme for the 2007-2008 rice season attracted a mere 240,000 tonnes of rice for exporter stocks, compared to earlier estimates of 8 million tonnes, said Ms Benjamas, a senior economist at the central bank’s northeastern office in Khon Kaen.
The major reason for the sharp drop of rice participation in the programme was soaring rice prices, which have persuaded farmers and middlemen to hold their rice.
This has affected exporters, according to Ms Benjamas.
In the first three months of this year, exports totaled 3.26 million tonnes, up 166.2 per cent from the 1.96 million tonnes shipped in the corresponding period in 2007.
The target rice export for the whole year was originally set at 8.75-9 million tonnes.
Deputy Prime Minister and Commerce Minister Mingkwan Saengsuwan said last week that Thai jasmine rice - khao hom mali - is currently priced around 34,600-36,000 baht per tonne (US$1,091-1,135), with 5 per cent white rice at 26,400-26,700 baht per tonne (US$832-842), and paddy at 17,000-18,000 baht per tonne (US$536-567).
The global food fight
The biofuel craze, commodity speculation, growing demand in emerging economies and soaring energy prices coalesce to boost food prices, with mass hunger and political instability looming, Simon Roughneen writes for ISN Security Watch.
“A hungry man is an angry man”
- this was Brenda Barton’s (the World Food Programme Deputy Director for Communications) apposite summing-up to ISN Security Watch last week.
Jacques Diouf, Head of the UN Food and Agriculture Organisation (FAO), took this further, wondering aloud to the world’s press why he had not been asked to brief the UN Security Council about a looming crisis that leaves 37 countries without enough affordable food.
In recent weeks protests have taken place in Indonesia, Peru, Mauritania, Yemen, Burkina Faso, Bolivia and Uzbekistan. In Egypt and Haiti riots turned deadly, with seven and four people killed, respectively, in both countries in the past 10 days, while over 40 died in Cameroon’s February food unrest.
Even as far back as August 2007, the quashed Saffron Revolution in Burma was sparked in the first instance by the junta’s overnight doubling of essential food and fuel prices.
Despite government attempts to shelter domestic food from soaring global cereal prices, essentials such as bread, rice, maize products, milk and soybean have continued to become more expensive, all over the world.
The facts are stark:
The global price of wheat has risen by 130 percent in the past year, and dairy prices have doubled since 2005. A combination of factors is making basic food and fuel too expensive for people in poorer countries - even as projected world cereal production for 2008 is a record 2,164 million tonnes, up almost 3 percent from last year.
But with across-the-board world food price rises averaging at over 80 percent during the last 24 months, this volatility could acquire a dangerous political counterpart, in countries where 60-75 percent of people’s income is spent on food.
On Saturday, 12 April, 20,000 Bangladeshis took to the streets - angered over low wages and high food costs - wrecking vehicles and attacking police, after last years rice crop was ruined by another of that country’s periodic floods.
A changing world
Growing demand for more food - in terms of quality and quantity - as well as general rising living standards in India, Brazil, Russia and China, where vast new middle classes are emerging, has part-prompted the price increases.
In both countries, oil demands are up, contributing to the US$100+ per barrel costs, as more people can afford to own a car, which in turn fuels the food price ramp-up by increasing transport costs and making fertilizer more expensive.
Thomas Friedman’s flat-world thesis seems relevant here - with consumers in emerging economies seeking to match western affluence. This means more cars, more meat and more high calorie, high protein foods - all of which puts pressure on oil supplies and prices, not least as more meat equals more fuel consumption for cooking, as well as increased demand for the grain feed for livestock and chickens.
Such changes are not irreversible, however.
Dominique Strauss-Kahn, the chief of the International Monetary Fund (IMF), got no demurral from the 24 finance ministers on his steering committee when he warned on 12 April that ongoing price inflation could undermine much of the recent pro-poor development gains in many countries.
This echoed fears outlined in a World Bank policy paper Rising Food Prices - Policy Options and World Bank Response - released on 9 April. Group President Robert B Zoellick was quoted as saying: “In some countries, hard-won gains in overcoming poverty may now be reversed.”
‘The Politics of the Belly’
Jean Francois Bayart’s above-named treatise took its title as a metaphor for the corrupt and patronage-addled nature of post-colonial African politics. But there seems to be a more literal application these days.
Politics has at least partly caused the food price increases, with corrupt administrations unwilling to maximize food-production potential, and other developing economies unable as yet to improve yields - with the worst performers squandering their thriving agriculture systems.
More directly, producer governments are restricting exports - notably rice - to meet domestic demand, but leaving neighboring importers in a quandary.
C Peter Timmer, visiting professor at Stanford University’s Food Security and Environment Institute, gave ISN Security Watch access to his work-in-progress analysis of the current food price situation. He wrote, “The newly elected populist government in Thailand did not want consumer prices for rice to go up, so they started talking about export restrictions [...].
On March 28 rice prices in Thailand jumped US$75 per metric tonne. They have risen another US$200 per metric tonne since. This is the stuff of panics [...].”
David King is secretary-general of the International Federation of Agricultural Producers. He told ISN Security Watch that “for example, only one-quarter of the irrigation potential along the Niger river valley is being exploited” and that “yields in Africa are very low compared with other regions, but there is massive potential for improvement.”
In 1998, food price increases brought people onto Zimbabwe’s streets, accelerating Robert Mugabe’s turn to demagoguery as a diversion from his regime’s frailties, and sparking his ruthless suppression of any political opposition. Zimbabwe was once called “the breadbasket of Africa,” but now cannot feed its own people, much less function as a swing supplier, helping meet demand and reduce prices.
Burma was once the world’s biggest rice exporter, now many of its people hunger under the quixotic and brutal dictatorship ensconced in its jungle hideaway-fortress capital in Napyidaw.
Politically expedient choices made by governments - donors and recipients alike - contribute to the structural issues undermining food supply in vulnerable locations.
As David King puts it, “it is much easier for developed countries to send their food surpluses as aid to somewhere like Ethiopia, than it is to make focused long-term investments in water management technology to reduce that country’s drought vulnerability. It is also easier for any recipients to divert attention from their own administration to external factors - such as food aid - when things go wrong.”
Eaten bread is soon forgotten
The impact of food price increases could well be serious instability in many countries.
Pakistan’s pivotal parliamentary elections were depicted as a policy-wonkish litmus-test for Muslim democracy and counterterrorism policy. But ordinary people voted for who they thought best able to help them make ends meet. The incumbent coalition led by President-General Pervez Musharraf took a hammering, as voters fused his anti-democratic policies with rising inflation now hitting consumers in the pocket. These days, Pakistani troops are guarding rice warehouses against looting, with similar scenes in the Thailand and Vietnam - the world’s number one and three rice exporters, respectively - and in the Philippines and Indonesia, both rice importers.
In Manila, President Gloria Macapagal-Arroyo recently jailed nine coup plotters, but legitimately expressed disaffection with her administration simmers on. She recently admonished rice traders against hoarding - saying that “anyone who steals rice from the people” will be jailed. Arroyo is clearly hoping that rice supply can be maintained on the domestic market, heading off any further price increase or shortage, which could bring people onto the streets. Such “people power” manifestations have twice changed governments in the Philippines, in 1986 and 2001 - the latter bringing the incumbent Mrs Arroyo to power.
But with Thailand, India and Vietnam all more or less ceasing rice exports, and China rebuffing Manila’s request for additional wheat, urgent calls were being made over recent days for high-level pan-Asian talks on the food price crisis.
David King’s timely warning to ISN Security Watch that “this type of thing can bring down a government in a developing country,” was realized on Saturday, 12 April, with Haiti’s Senate sacking the prime minister in a deliberate snub to President Rene Preval over his response to Port-au-Prince’s deadly food riots.
The most vulnerable: Crumbs from the table
The price spike provoked “tortilla riots” in middle-income Mexico, and wealthy consumer groups in Italy staged a one-day protest at the price of pasta. But it is the world’s poor who are feeling the pinch. Most vulnerable could be the aid-dependent in Darfur, Somalia, North Korea and elsewhere.
Brenda Barton told ISN Security Watch that “on 20 March the WFP appealed to donors for an extra half-billion dollars - just to enable us to meet the needs we projected back in June 2007.”
“This does not even account for any emergency or contingency funding needed, say, if another Niger-type scenario came about,” she added, referring to the August 2005 near-famine in that impoverished Sahelian country, which left over three million people verging on starvation.
But the overall global economic downturn and rising inflation means less money, and with demand elsewhere soaring, food aid might be squeezed - bad news for the 73 million people across 78 countries that need WFP-sourced assistance.
As Barton explains, malnutrition has some serious spin-off effects: “While the food shortages and potential malnutrition are deadly serious in themselves, this issue affects development issues across the board, with at least six MDGs compromised: take education- children cannot learn when hungry, and with money tight, kids get pulled from school so parents can pay for food.”
“A slow onset of malnutrition can have a devastating impact: Even as families cut from three to two to one meal per day, economizing on quality as well as quantity, and the very young are worst-affected,” she added.
Hot money trumps hot weather?
“Green” subsidies for biofuel crops are diverting agri-output away from food. American farmers have diverted over 30 percent of corn as part of a government-sponsored ethanol production scheme - aiming to reduce oil dependency and offset man-made global warming.
The US was the world’s fourth largest rice producer, the knock-on from divestment into corn is lifting rice prices amid greater demand, while reduced US corn-for-food output has put pressure on corn importer countries to diversify into ever more expensive wheat and sorghum, the latter needed to replace corn as animal feed.
Another stark fact: Over 240kg of corn would feed one person for a year. This same amount is required to produce just the 100 liters of ethanol needed to fill a SUV tank.
But on 4 April the BBC reported that no increase in global temperatures has been recorded by the World Meteorological Organisation since 1998, despite growing levels of carbon in the atmosphere, instead linking the 1998 recorded all-time high with El Nino, and the recent cooling with La Nina - two vast Pacific Ocean currents.
With those natural factors seemingly decisive to recent weather, and after bitterly-cold winters in China - its coldest in a century - and in central Asia and across North America - the biofuels gambit thus seems doubly-questionable, as it fuels food price increases more efficiently than its does enviro-friendly automobiles.
Meanwhile, the falling dollar has put pressure on commodities denominated in that currency, especially when import-export deals are signed off months in advance of delivery, with costs based on a now outdated dollar valuation.
More debilitating might be the fall-out from the subprime collapse and slowing global economy. Both have prompted a commodities bubble, with real economy speculation leading farmers to divest into crops they anticipate to reach higher prices, fuelling the supply and demand crisis.
Elsewhere, with the tech bubble a mid-term memory and the real estate downturn still biting hard, return-seeking investment funds have moved money in and out of petroleum and then food commodities, inflating the price of wheat by 70 percent between 2005-2007.
What’s on the table now?
The impact on the global economy remains to be seen - but the IMF warned last week that commodity price increases were feeding the inflation beast, curtailing what policy options were available to deal with an overall global slowdown. This too can have political ramification. China’s communist rulers, now shaken by Olympic and Tibet protests doubtlessly also recall the inflation-driven unrest culminating in the 1989 Tiananmen Square massacre.
On 10 April, UK Prime Minister Gordon Brown called on his Japanese counterpart and current G-8 chairman Yasuo Fukuda to take the lead on devising an international plan to deal with the food spike.
David King believes that “policymakers should use this [price increase] as a catalyst to develop agriculture, especially in low-yield, high-potential regions,” echoing a call from the International Rice Research Institute for “a second Green Revolution,” replicating the improvements in the 60s and 70s in agricultural technologies that boosted production across Asia.
But C Peter Timmer concluded on a sober note: “[T]here is already substantial evidence that significant increases in production, if they are attainable at all, will require development of new crop technologies that are not on the shelf or even in the pipeline [...]. The prospect is that very high food prices, perhaps near current levels, will be a market reality for many years.”