Food and bev industries struggling to cope with fuel costs

Posted by Daniel Palmer on 2nd July 2008

The high cost of fuel is wreaking havoc with some food and beverage industries worldwide, with demands for government aid increasing by the day.

Winemakers in the south of France have vandalized supermarkets and burned two police cars in the southern city of Montpellier. The protest by vintners last week was in response to skyrocketing fuel costs and falling prices for regional wines.

The thousands of protesters were seeking to draw the government’s attention to the plight of winemakers in the region in the hope they may consider offering aid to those struggling to deal with the current economic conditions. The protest turned violent, however, with riot police forced to use tear gas on a small minority.

Many winemakers in the region have been struggling, with Philippe Vergnès, president of a wine growers’ syndicate in the Aude region in south-central France, telling the International Herald Tribune that 98 percent of 15,000 vineyards there had been “crippled financially”.

A delegation of winemakers has since had a meeting with the French Agriculture minister, Michel Barnier, and Mr Barnier last night announced that €2m will be provided in aid to the region’s winemakers. He has, however, refused to bow to demands of minimum prices.

The French wine industry is symbolic of the concern the fuel price is creating for a number of food and beverage industries worldwide. In Australia, the Queensland Seafood Industry Association (QSIA) held talks last week with the Queensland Government over fears the Queensland seafood industry could collapse before the end of the year. The concern is based on the falling prices for seafood exports, coupled with the escalating cost of fuel.

Neil Green, President of the Queensland Seafood Industry Association (QSIA), advised that fishing families are struggling in the current economic climate and many could be out of business by Christmas. “Queensland fishing families — and the fishing industry in Queensland is mainly made up of family businesses — are being squeezed like never before,” he said. “It is a combination of the high Australian dollar, cheap imports and now the skyrocketing price of fuel.”

Japan’s seafood industry has faced similar issues with fuel costs damaging the bottom line, and the Japanese Government has now announced that they will pay some of the fuel costs for the industry in order to ensure it can remain viable for those struggling at the moment.

Food commodity price hikes, coupled with the rising cost of fuel, are also causing much angst with foodservice businesses and consumers. There have been public protests by consumers in a number of countries and the worries have led to some unusual decisions by governments. The Mexican Government, for example, has announced a freeze on the prices of 150 food products until the end of this year.