Half of Belgian food makers have seen their supply chains hit by the impact of the war in Ukraine, with four in ten warning they may have to reduce or stop production in the coming weeks.
A survey conducted by Fevia, the organization that represents Belgian food manufacturers, paints a grim picture of the sector’s short-term prospects following the Russian invasion of Ukraine.
The trade body pointed to the threat of raw material shortages and costs “which have reached record highs”.
“European vegetable oil refiners get 35-45% of their sunflower oil from Ukraine. Producers of, among other things, prepared products made from potatoes and vegetables, ready meals, margarines and minarines, sauces, chocolate spreads, cereals and pastries, but also medical foods and for babies, are now urgently looking for alternatives which are of course also much more expensive,” explained Fevia.
The organization said its members had faced a shortage of raw materials and rising costs due to the Covid-19 pandemic but “the sector appeared to recover economically” in 2021.
However, he added: “The war in Ukraine works like an accelerant of fire and makes it barely profitable for 30% of food companies to continue producing.”
Soliciting 700 members, the survey also showed that 70% of the respondents had to change the composition of the products or will have to do so soon.
Fevia asked the country’s government to support it and consumers to show flexibility to keep the food chain running.
Its president Anthony Botelberge said: “Our companies will do everything to continue to guarantee the food supply, as they have done during the pandemic. We are a resilient sector, but in these exceptional circumstances our businesses need support and flexibility.
If food companies cannot pass on inflationary costs, it “will hardly be profitable for them to continue producing,” Botelberge added. The Fevia survey revealed that 9% of Belgian food companies had reduced production in recent weeks.
Soaring energy prices are a major problem, according to Fevia, its survey has shown. The organization has found that half of the food businesses it represents have seen their electricity bills at least double in a year and 37% have seen their gas bills triple. Fevia called on Belgium to take temporary measures in addition to structural measures to temper the energy bills of Belgian food companies.
A shortage of raw materials and packaging also has an impact. “Bread and bakery makers, pasta and cookie makers, who use flour and flour as an ingredient, are also feeling the impact of reduced wheat exports from Russia and Ukraine. But there are also shortages of other ingredients, such as linseed oil, honey and egg products, for Belgian producers. Even for packaging such as glass bottles and jars, there is a risk of shortages,” Fevia said.
Belgian governments are asked to temporarily deviate from the strict application of labeling legislation. “In this way, food companies can quickly use alternative raw materials and ingredients to compensate for shortages, of course with respect for food safety,” he said.
Fevia CEO Bart Buysse said: “This crisis is a stress test for the entire food chain. All channel partners recognize this as well. In these extremely difficult circumstances, we can only get through this together.
For more of Just Food’s coverage of how the dispute is affecting the food industry, please visit our dedicated microsite.