News briefs: ABF, ConAgra and butter prices

By Charlotte Eyre

- Last updated on GMT

Related tags: Associated british foods, Milk, Food

Associated British Foods may sell its bread brands; the ConAgra
recall makes a painful dent in profits; and butter is too expensive
for some bakers in the Asia Pacific region.

ABF considers bakery sale ​UK-based Associated British Foods (ABF) is considering offloading its bakery divisions, after higher commodity costs led to a fall in profits, according to the Times. As well as rising flour prices, the company has had to contend bread falling in popularity in recent months, the newspaper said, quoting unnamed industry insiders. Earlier this month, ABF posted overall group revenue, which includes sales of food products, ingredients, feed and clothing divisions, of £6.8bn (€9.5bn) for tax year 2007, a 13 per cent increase from the year before. However, In ABF's grocery division, which includes the bread brands Kingsmill, Allison and Sun-blest, margins declined 1.3 percentage points to 5.8 per cent, from 7.1 per cent the year before. Profit in this group also went down to £153m (€214m), a 16.9 decrease from £182m (€255m) last year. According to the Times, ABF refuses to comment publicly on any disposal plans, even though company insiders admit that bread is no longer core to the business. ConAgra recall costs millions ​US food giant ConAgra said last week that the recall of Banquet and private label pot pies over salmonella fears will cost the company $30m, reminding other manufacturers the importance of stringent health and safety measures. The company first recalled the products in October, after The US Department of Agriculture's Food Safety Inspection Service (FSIS) said that the pies may contain the Salmonella pathogen. The FSIS also said there were over "problems" with the company's Hazard Analysis Critical Control Point Programme (HACCP), an internationally accepted systematic method of identifying and rectifying specific hazards in plants. Although production stopped, over 200 cases of salmonella poisoning were later linked to ConAgra. However, the company has now received state permission to resume manufacturing the pies, as the safety breaches have been regulated. "We've strengthened processes and testing within our plants and for our suppliers, and we have revised the product cooking instructions to make certain we minimize any potential for a future issue,"​ said Gary Rodkin, chief executive officer of ConAgra Foods. "Any lapse in the safety of our food is unacceptable, and I know the steps we've taken will make a positive difference and help us provide consumers and customers with safe, wholesome products,"​ he added. Asian cake industry priced out of butter ​The commodity squeeze in the Asia Pacific region is making butter too expensive for many bakers, according to Japanese newspaper the Asashi Simbun. Cake makers have been hit by a triple whammy of greater demand for dairy in the region, drought in Australia reducing supplies, as well as dairy firms focusing on milk products that have bigger profit margins. The butter supply to cake shops is therefore 20 to 30 per cent lower than last year, the newspaper said, pricing some manufacturers out of the market. According to the US Department of Agriculture, dairy costs all over the world are all hitting record highs. On the international dairy market prices for milk powders are currently well above US$400 (€298)/100kg with cheese prices also approaching the figure in value, the USDA said. Although the government body did not give a figure for the cost of butter, it said that butter is similarly at a "historically high level."

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