Companies struggle to pass on price increases to consumers. First-quarter profits at food companies, like Atria or HKScan have fallen more than 30% compared with the same period in 2007. It is expected at least the second quarter to be equally challenging.

Slaughtering costs
Finland's pork slaughtering costs rose 11% in January after rising by 7% year-on-year during the last quarter of 2008. Meanwhile, costs for pig slaughter in the rest of Europe have dropped. "It's the gap between these two which is an issue for both Atria and HKScan right now," an analyst said.

Consumer prices
Consumer prices for pigmeat increased around 8% in the first quarter compared with 2007, while that of ham rose only roughly 5%. Prices for many agricultural products went up with growing demand from emerging markets and increasing use of food crops to make biofuels.

Related websites:
• Atria   
• HKScan
• Reuters