Food prices rises are inevitable, says the maker of Weet-Bix and Sasko

Business Insider SA
Harvested wheat being poured from a truck into a grain elevator. (Image: Getty)
Harvested wheat being poured from a truck into a grain elevator. (Image: Getty)
  • The producer of White Star maize meal and Sasko bread says there is little it can do as wheat and maize prices stay high amid Russia's invasion of Ukraine.
  • Prices of locally produced pasta, wheat flour, breakfast cereals, and snacks will be affected, although it's still early to quantify the full impact.
  • Maize and wheat have shown sharp price increases since Russia first invaded Ukraine.
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Some food producers around the continent are seeking cheaper alternatives to wheat and maize, which have dramatically increased in price since Russia's invasion of Ukraine. But such options are not open to it, one of South Africa's leading food producers say, and prices will be going up.

Right now, though, it is hard to tell by just how much.

Between them, Russia and Ukraine control more than a quarter of the world's wheat exports, and the Russian invasion of Ukraine has affected other food commodities too, through mechanisms that include higher oil prices.

PepsiCo-owned Pioneer Foods, the manufacturers of products such as White Star, Sasko bread, Weet-Bix, and Grande Pasta, says it is unable to remove or substitute the grains in its products and so keep prices down.

"The recent surge in soft commodity prices, in our case most notably wheat, maize, and vegetable oil, on the back of the war in Ukraine is real," Tertius Carstens, CEO of PepsiCo Sub-Saharan Africa, told Business Insider South Africa this week. 

"And [it] will have an unavoidable and material impact on the price of locally produced food such as wheat flour, bread, pasta, maize meal, breakfast cereals, and snacks. Wheat and maize, as examples, are major key ingredients to the food products listed here and cannot be removed or substituted," Carstens said.

In some African countries such as Egypt, the Democratic Republic of Congo (DRC), Nigeria, and Cameroon, food producers are looking for cheaper alternatives which they are mixing into pasta, bread, and pastries, effectively tweaking their recipes, Bloomberg reported this week.

Food producers in those regions are turning to alternatives such as locally sourced rice, manioc flour, and sorghum to avoid using wheat and maize.

Carstens said the impact on the food producer is being compounded by South Africa's weakening rand and the rising cost of food.

"It is of concern but, too early to accurately quantify the potential effect of increased product pricing on consumer demand given that the increase in raw material and input pricing is only now being implemented and not yet fully reflected in off-shelf pricing," he said.

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