The fall of food prices and the continued globalisation of the food industry were forecast at the World Union of Wholesale Markets’ (WUWM) congress last week.
Henning Otte Hansen, senior advisor at the Institute of Food & Resource Economics at the University of Copenhagen, urged the wholesale trade to carve out a new role for itself in the changing market.
He questioned whether the global food crisis was a long-term crisis or a short-term “bubble” that will soon burst and he explained that more than 30 factors can make up a food crisis, with short-term influences including small stocks and poor harvests, while long-term causes include the switch of production from food to biofuels and increasing oil prices.
But Otte Hansen claimed that the sector is equipped to respond to the situation and he maintained that food prices will fall in the future.
He said: “Only a very small part of the cost of the food you buy goes back to the grower, so prices should not necessarily increase as production costs do.”
The changing shape of the market means that the major multiples will be able to harness even more power over their suppliers in the coming years, he added. It will be up to wholesalers to ensure that they reposition themselves in this time.
Otte Hansen said: “The top 10 retailers have around 70 per cent of the total market share and this will reach 80 per cent in the next seven or eight years. The growth of the retailers will continue to put wholesale markets under pressure as they trade directly in the future. The wholesale trade will have to find new ways to integrate suppliers and buyers and become more than a marketplace.”
