October 4, 2007

 

High wheat prices send meat and dairy prices soaring in Cyprus

 

 

Meat and dairy consumers in Cyprus are going to dig deeper in their pockets in the coming months as meat and dairy prices expected to go up.

 

The surge in wheat prices has spurred a recent chain reaction of price increases in food products, especially meat and milk around the world.

 

The problem has also affected butchers complaining of extra burdens and milk industry officials blasting retailers for fuelling the existing problem with their "large profit margins".

 

Costas Livadiotis, Head of the Butchers' Association, said that by December, meat prices would rise to an all-time high, especially lamb.

 

Pork has seen an increase of 7.5 percent, beef four per cent, chicken 15 per cent and lamb also around 15 percent, he said.

 

Livadiotis said the continuous price increase in wheat -- which is used for animal feed -would certainly hike meat and dairy prices again in the next few months.

 

Wheat prices have risen about 40 percent in recent months with world wheat inventories headed for their lowest level in nearly three decades.

 

Livadiotis added that local meat prices were also being affected by a dispute over who is responsible for disposing of leftover meat at butchers.

 

Until recently, the disposal of animal remains at butchers' shops was undertaken by the Municipality, but they have now handed the responsibility to the butchers themselves, leaving thousands of unhappy butchers with the extra costs of getting rid of the waste.

 

Livadiotis said local meat prices will likely to hit an all-time high despite being the lowest priced meat in the EU.

 

Meanwhile, prices have also increased for milk, but that isn't only due to the wheat crisis, explained the director of the milk marketing board, Andreas Marangos.

 

He said overpricing of the retailers in milk products also contributed to the problem.

 

He explains: "The producer itself, who needs about a year to grow and nurture the animals, would sell the milk for 24 cents. The retailer would buy the milk in the morning and by 10am would sell it for 15 cents more. The retailer is therefore selling the milk for too much and it is not only milk we are talking about but also Cypriot dairy products."

 

Marangos said the Competition Protection Committee needed to look into the matter because the latest surge in milk prices was not due to increases in wheat prices.

 

He noted the contracts [with the retailers] were signed in May before wheat prices increased but at this moment, the producers need to sell the milk by around three to four cents more because their costs have now indeed gone up. The producers, however, are caught between a rock and hard place because of these contracts.

 

Taking into account the fact that 70 percent of the costs come from animal feed, additional financial burdens are put into milk producers.

 

He urged retail companies need to lower their profit margins and also renegotiate with the milk industry as warns, there would be milk to sell anymore.