Friday, March 31, 2023

Spain’s tomato and pork costs pushed up by exterior demand, says Mercadona boss Juan Roig

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Spain’s wealthiest grocery store boss mentioned an inflow of patrons from Europe and China drove up the price of Spanish tomatoes and pork — two very important parts of nationwide delicacies — as he sought to elucidate acute value inflation.

Juan Roig, the billionaire proprietor of Mercadona, devoted a big a part of his annual press convention to inflation after a 12 months during which hovering costs sapped the buying energy of world customers and he was known as a “ruthless capitalist” by one Spanish minister.

Roig mentioned the Ukraine struggle had hit tomatoes as a result of the spike it triggered in fuel costs prompted the shutdown of tomato-growing greenhouses in northern European, which had been heated with the gas.

As an alternative patrons flocked to Spain’s solar-powered growers, serving to to drive up tomato costs from €1.39 in January 2021 to €2.05 per kilogram as we speak. “The associated fee has gone up by a whopping 66 cents. We’ve raised costs by 50 per cent,” mentioned Roig, whose fortune of greater than €3bn makes him Spain’s fourth-richest particular person.

“So we had two choices: both purchase tomatoes or go away prospects with out tomatoes. And we believed it was extra vital to have tomatoes at €2.05 than to not have tomatoes.”

Salad shortages are easing within the UK — the largest purchaser of Spanish tomatoes final 12 months after Germany — following provide disruption blamed on unusually chilly temperatures in southern Spain, in addition to Brexit and poor grocery store planning.

On pork, a delicate product in a rustic that cherishes its jamón ibérico, Roig mentioned the worth had jumped due to demand from China, which counts Spain as its greatest provider of the meat, in response to Worldwide Commerce Centre knowledge.

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“There are one billion Chinese language individuals,” he mentioned. “How a lot did they ask for? . . . I don’t know. What I do know is that pork value €1.05 [per kilogram in January 2021] and now it prices €1.96.”

“And if we wish sausages and chorizo and ham, both we increase the costs or we don’t have it. That’s what I attempt to convey to everyone. It doesn’t depend upon our private selections. It is determined by demand and provide.”

Whereas Spain has been exporting vital quantities of pork to China for a number of years, and Europe’s cross-border salad commerce is effectively established, Roig mentioned “this 12 months we’ve got seen rather more affect” from worldwide patrons.

He added: “We’ve had tensions with suppliers like we’ve by no means had in our lives. We’ve been preventing with them rather a lot as a result of the worth will increase are, effectively, I’ve by no means skilled something like them.”

He burdened that Mercadona, which has a 25 per cent market share in Spain, was doing what it might to alleviate inflation, noting that it had raised costs by a median of 10 per cent final 12 months whereas meals prices have been up 12 per cent.

The corporate reported an 11 per cent rise in 2022 gross sales to €31bn throughout Spain and Portugal and internet income up 5 per cent to €718mn. Nevertheless it mentioned its revenue margin of two.3 per cent was at “one of many lowest ranges in its historical past”.

As public discontent over rising costs mounted final 12 months, Ione Belarra, a leftwing minister from the junior accomplice in Spain’s coalition authorities, known as Roig a “ruthless capitalist”. Requested concerning the remark, he mentioned: “All people has an opinion . . . I respect their opinions even when I don’t share them.”

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He didn’t provide an optimistic tackle the outlook for costs. “The previous two and a half months to this point have been fairly dangerous for inflation,” he mentioned, noting knowledge revealed on Tuesday that confirmed meals inflation in Spain hit 16.6 per cent year-on-year February. “We don’t understand how the world goes to work, we don’t know when the struggle in Ukraine goes to finish . . . we wish to decrease costs.”


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