Challenges facing the food industry in 2022/23: What are the solutions?

Like many sectors across the UK and Europe, the food industry is struggling. A perfect storm of Brexit, the war in Ukraine, and the pandemic have resulted in soaring ingredient and energy prices. And coupled with labour shortages and an impending recession, many food producers are worrying about what their next steps should be.

FEG customer PK Foods hit the news recently, highlighting some of these issues and unfortunately they’re not alone.

In this article we’re discussing some of the challenges facing the food industry over the next year and some potential solutions for mitigating them.

 

challenges facing the food industry - shortages of ingredients like grain

What are the challenges facing the food industry?

Raw ingredient shortages

When we interviewed PK Foods director Jason Stevenson back in March 2021, he explained some of the issues he had experienced in sourcing raw ingredients in the run-up to Brexit. However, since then much has changed. The war in Ukraine and impact of sanctions on Russia has resulted in a global shortage of many raw ingredients.

Russia and Ukraine export more than a third of the world’s wheat and barley, and more than 70% of its sunflower oil. They are also large suppliers of corn, while Russia is the world’s biggest fertiliser producer.

Then there are the knock-on effects. With Ukrainian chicken feed in short supply, prices have skyrocketed, making it more expensive for UK producers. At the same time, thousands of Ukrainian poultry workers in Polish plants have returned home to fight, and countries such as Malaysia have introduced export bans on poultry to protect their own supply.

Ingredients are soaring in price, making it increasingly difficult for food producers to preserve their already narrow profit margins.

Energy costs

If you’ve paid any attention to the news lately, it’s hard to avoid reports about the increasing cost of energy. Russia’s invasion of Ukraine has disrupted global gas supplies, while a cold European winter last year left existing supplies low.

While personal users are facing unprecedented increases in the cost of gas and electricity as the energy price cap continues to rise, the picture is bleaker for businesses. Unlike personal users, commercial energy customers are not subject to the price cap and as a result their bills could be substantially higher.

For a food factory running high energy consuming equipment such as ovens and chillers this can get extremely expensive. Business energy costs have already risen by 40% and further increases are expected.

challenges facing the food industry - energy costs
challenges facing the food industry - changing consumer behaviour

Labour shortages

Global labour shortages are one of the biggest ongoing challenges facing the food industry. Although initially caused by things like Brexit and the pandemic, worker numbers have not normalised as expected.

A key reason for this is that every industry is facing the same issue and with job vacancies at an all-time high, workers have greater choice over the environments they want to work in. Many workers are choosing alternative types of employment with better conditions and higher salaries and the food industry is struggling to meet these requirements.

This leaves food producers either struggling to maintain production levels, or being forced to increase wages – both of which eat into profits.

Changing consumer behaviour

 As the cost of living rises consumers are being forced to tighten their purse strings. Food budgets are stretched, and shoppers are more selective with the products they buy.

As the UK heads towards an anticipated recession, we can also expect consumers to spend less on luxuries like dining out and takeaways. And lower demand for producers’ products means lower profits.

What are the solutions?

It’s certainly a challenging time for the food industry and the picture may seem bleak at the moment. However, there are ways to lower costs and increase efficiency. Below we’ve outlined some potential solutions to mitigate some of the issues faced by the industry.

Automation

We’ve seen an increasing shift towards automation in the food industry in recent years – and with good reason. Automating your manufacturing process could improve efficiency and product quality, provide an answer to the skills shortage, as well as create a more sustainable facility.

Read our guide to food factory automation to learn more and find out how FEG can help. 

Investing in your facility

Automation isn’t the only investment you can make to cut costs. Environmental technologies such as heat recovery systems can conserve energy and could potentially save you a lot of money.

Heat recovery systems work by conserving energy that would otherwise be wasted, for example from refrigeration processes, and converting it into heat that can be used elsewhere. The costs saved can be significant, depending on your business type and systems used it is possible to power entire heating and hot water systems using large-scale heat recovery.

Training

Operations and maintenance training can be a cost-effective way to build best practice in your factory, empowering teams and reducing downtime.

Investing in training for your team can help them get the most out of existing or new equipment, prolonging the life of your machinery and improving consistency. Ultimately this means fewer instances of machine failure, less stoppages and downtime, and a better quality product – all of which will save you time and money.

At FEG we offer tailored training packages to embed the skills that matter to your operation. 

Grants and funding

It’s worth checking if your business qualifies for any grants, loans or advice schemes which can support your business. There are several schemes aimed at manufacturers upgrading facilities and upskilling teams, as well as regional funds you may qualify for.

Some schemes which may be relevant for your business include:

Advanced Manufacturing Technologies to Create, Activate & Automate (AMTECAA)

A fund for Manufacturing SMEs in the Black Country, Greater Birmingham and Solihull, Coventry & Warwickshire, and Stoke-On-Trent & Staffordshire LEP regions to explore how advanced manufacturing technologies can boost business productivity or help you grow.

Energy for Business

Support and grant funding for SMEs with projects to reduce carbon emissions or save energy in the Derby, Derbyshire, Nottingham, Nottinghamshire, Leicester, and Leicestershire regions.

Manufacturing Growth Programme

Free advice and support for SME manufacturers in the West Midlands, Yorkshire, South East, and parts of the East Midlands and East of England.

Low Carbon Innovation Fund

Investment for SMEs in the East of England to help lower their carbon output.

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Talk to us about your food factory project

There are numerous challenges facing the food industry at the moment – but we can help. Our team has a wealth of experience in working with food manufacturers of all sizes. Get in touch to discuss your cost-saving project.