How the Belgian food industry is fighting a perfect storm, with further price increases to come.

Overall inflation is falling, but the end of rising food prices is not yet in sight. A quarter of the often energy-intensive food companies are seeing their fixed energy contracts expire and move to variable rates next year, sometimes increasing their costs by 3-4 times.

The sector will also face a wage indexation in January. This is a legal mechanism, quite unique to Belgium, which comes into play when inflation raises. It will be forcing companies to pay some 11% more in wages. On top will be the renegotiation of contracts with some suppliers. “Suppliers who honoured their contracts and bled over the past year will now raise their prices substantially,” says Anthony Botelberge, Chairman of food industry federation Fevia. That inflation has yet to be translated into prices in supermarkets.

Fevia also points the finger at retailers. They increase their RSP’s on certain products by more than the increase passed on by their suppliers. During negotiations the attitude is too confrontational. The delisting weapon is being abused and huge fines are imposed for delayed deliveries.

“Even though we are finally noticing some easing in the negotiations with the big supermarket chains: it has all taken too long. Many companies are at their wits’ end as a result, and without support from our chain partners and governments, we risk undermining the local anchoring and continuity of the entire food chain,” says Bart Buysse, CEO of Fevia.