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Paris (AFP) – Pasta, oil, chicken: the grocery bill will continue to climb in 2023, but by how much? Supermarkets and agrifood manufacturers are once once more returning to the negotiating table to discuss next year’s prices, in an explosive context.
More than 20% for canned fruit, or 41% for pet food: in view of the requests for price increases from manufacturers, the president of the E.Leclerc strategic committee, Michel-Edouard Leclerc, said he expected a “tsunami” of food inflation next year.
Strangled by the rise in their production costs, agro-industrial companies will once once more try to convince supermarkets to buy more expensive yogurts, minced steaks and other products that they will put on their shelves.
“Requests from manufacturers are very often between 10 and 25% increase” in price, told AFP Jacques Creyssel, general delegate of the Federation of Commerce and Distribution.
And for this “round” of negotiations, a great deal of uncertainty remains: to what extent will the cost of energy be taken into account, the prices of which have soared but which large retailers are not legally obliged to pass on.
energy surge
After an exceptional year in 2022, with renegotiations that had become almost permanent in an attempt to take into account the surge in agricultural commodity prices and production costs, negotiations for 2023 must return to a more normal pace.
Manufacturers have normally had to send their price requests to their retail customers before the deadline of December 1, and the two parties have until the end of February to agree on the terms of purchase.
In 2022, some manufacturers obtained several bursts of increases: the French leader in poultry LDC, for example, was able to make its customers accept one of 25%, then another of 10%.
But not everyone has been so well off: if the Egalim 2 law, adopted in 2021, forced distributors to accept price increases linked to the agricultural raw material without negotiation, this is not the case for the costs of industrial production, including energy.
Those who have not managed to pass the increases “find themselves on a ridge line” and will try to integrate into their new requests for revaluation “the price increase that they might not pass in 2022 , for lack of agreement with the distributors”, explains to AFP Thierry Dahan, the mediator of agricultural trade relations.
Call for solidarity
Hence the risk of a sharp rise in prices, while food inflation, at 12% over one year in October according to INSEE, is already “at a level rarely seen in France”, observes Yannick Fialip, president of the economic commission of the first agricultural union, the FNSEA.
Cornelian dilemma: without a significant increase, producers and industrialists might “stop producing”, or even be bankrupt according to him. But on the other hand, it is the consumers at the end of the chain who will suffer in the event of a sharp rise in prices.
The General Inspectorate of Finance (IGF) recently estimated that neither manufacturers nor supermarkets had tried to take advantage of the period to inflate their margins in 2022. Their room for maneuver is therefore quite limited.
And in a context where customers are very attentive to their receipts, supermarkets may be reluctant to grant price increases that might make them less competitive compared to the competition.
“We have no choice: without solidarity, the whole edifice collapses,” pleaded Jean-Philippe André, from Ania, which represents the agri-food industry.
“Everyone will have to take part of the effort, apart of course from the farmers, who are protected by Egalim 2”, observes in echo Jacques Creyssel. But he adds that “those who will have to make the greatest efforts are the players with the biggest margins, the big international industrialists”.
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