Nestle, Kellogg struggle to pass on rising food costs

Nestle, Kellogg struggle to pass on rising food costs
From:http://www.china-food-wholesaler.com/
Key words: food ,coffee, products
Nestle, the world's largest food company, and Kellogg, the biggest US cereal maker, can't raise prices fast enough to sustain earnings growth after the cost of grains, dairy products and meat surged to records.

Vevey, Switzerland-based Nestle said on August 7 that first- half profit increased 5.9%, the slowest in four years, as cocoa and coffee costs rose. Kellogg said July 31 that second- quarter net income growth of 3.7% was curbed by expenses of making products from Cheez-It crackers to Pop-Tarts.
Nestle has dropped 5.2% this year in Zurich. In London, Domino's has climbed 7.2% and Cadbury has dropped 8.7%.

Dominos advanced 12.25 pence, or 6.9%, to 189.75 pence on the London Stock Exchange. Cadbury gained 8 pence, or 1.3%, to 627 pence in London, and Nestle gained 98 centimes, or 2%, to 49.30 francs in Zurich.

Governments are taking steps to limit food inflation. The European Union scrapped a requirement for farmers to leave 10% of land fallow to try to increase food supply and reduce the cost of agricultural commodities.

''Food prices and energy are still elevated, which is causing inflation to stay high,'' Howard Archer, chief European economist at Global Insight, said by phone on August 8.

US Feedlots

In the US, food prices will expand 5.5% this year, the fastest rate since 1989, according to the Department of Agriculture. The cost of beef jumped as the highest corn prices since at least the US Civil War, based on Chicago Board of Trade data, mean US feedlots are losing money on every animal they sell, discouraging production.

US commercial feedlots lost an average $US88.78 on each steer or heifer sold for slaughter in June, compared with a loss of $US50.07 in May and a record loss of $US169.80 in March, said Erica Rosa, an economist at the Livestock Marketing Information Center.
www.china-food-wholesaler.com