Food makers warned over poor contracts

Peter Bennett, head of food at solicitor Roythornes, warned that the crisis in Ukraine, "often referred to as the 'bread basket of Europe' due to the country's status as one of the world's biggest exporters of wheat and corn", had resulted in sharp increases in price for the crops. He added: "Price hikes like these highlight the need for food manufacturers to protect themselves contractually, and this is becoming a prevalent issue in the UK. "The impact of price increases and reduced produce availability, however minor they may seem on paper, can pose serious problems for the food supply chain." He said, if manufacturers didn't get ingredients they would be unable to make the food, and increasing ingredient costs were reducing already squeezed margins. "This raises serious issues for the industry exacerbated by the reluctance of retailers to alter pricing. The result is greater pressure on the manufacturers who will now be looking to build flexibility and clauses into contracts that allow them some leeway when it comes to delivery volumes and lead times. "In the UK, the problem will only grow in the coming years as flooding heightens the problems faced by farmers."