Friday, April 22, 2011

Norfolk ice cream makers call for VAT cut

Norfolk provides a vast range of premium, locally-produced ice cream products, which despite the tough economic conditions, have continued to tempt customers. But beyond the ever-growing queues outside ice cream vans and farm shops, things behind the scenes are not always so rosy with manufacturers battling against massive hikes in ingredient prices.

Alongside increases in fuel costs and VAT charges, coupled with the cumulative effect of recent wet summers and hard winters, there are fears that some producers could be forced out of business, according to The Ice Cream Alliance.

The not-for-profit organisation, which supports the production and vending of high quality ice cream, has now written to chancellor George Osborne calling on the government to classify ice cream as a food 
rather than a luxury item – thus ending its VAT loading which is currently 20pc.

Zelica Carr, chief executive officer for The Ice Cream Alliance, said: “The ice cream industry plays a major part in the economy of the UK with sales of around £1.3bn a year but many businesses are fearing for the future after being hit by a succession of swingeing price increases.

“I have written to Mr Osborne asking him to reconsider the classification of ice cream as a luxury product and re-classify it as a food and reduce the VAT levied on it to zero. “Ice cream plays an important, if often under appreciated, role in British life. It provides an affordable feel good factor which in today’s economic climate is sadly lacking for many families.”

According to the organisation – which has more than 600 members –producers have seen sugar rise from £460 a ton in January to £800, with fears that it could rise to £1,400 in June. Skimmed milk powder has increased from £1,800 per ton in January to £2,900, while cocoa powder has virtually trebled from £1,250 per ton to £3,600.

Manufacturers in Norfolk said despite the sunny weather providing a healthy kick-start to sales, any help to counteract the spiralling production costs would be welcomed. Simon Edye, director of Ronaldo Ices, based in Lothian Street, Norwich, said the shelving of the VAT loading would do a “tremendous amount of good” for his business, but was sceptical that whether the reclassification of ice cream as a food would be successful or even correct.

“I think nowadays ice cream is a luxury and the fat value of some ice creams is so high is it food?” he said. “The ingredients prices are soaring. They are up about 17-20pc in key foods such as cream. Chocolate prices are going up 20pc. It’s a nightmare. I think we’re all worried about the price of chocolate.”Mr Edye, who formed the company in 1983, said he has been forced to pass on some of the cost to his customers through increasing sale prices by 3-4pc, although this is still not enough to cover the full cost of the ingredients.

But he added: “We’re busier than we have ever been so I’m not complaining about business. If the sun keeps shining then it’s boom time here.”Bosses at Norfolk’s oldest family –run ice cream producers, Parravani’s, in Chedgrave, near Loddon, which was founded in 1898, said they have also had to increase prices to combat rising costs but this had not put off loyal customers.

Dominic Parravani said: “Within 113 years we have seen quite a few recessions but still ice cream is something that has lasted. “We go to a lot of events and fairs and people do bring pack lunches because they do not want to pay for food but they will pay for an ice cream. We’re very lucky – we have fantastic support and very loyal customers.”

He added that the loss of local dairy herds was also putting a strain on ice cream producers and wanted more help directed towards farmers. Producer Judy Clarke, of Clarke’s Ice Creams, based at Manor Farm, in Wattlefield, near Wymondham, welcomed an idea to shelve the VAT loading, although the four-year-old company is able to keep some costs down through having its own dairy herd.

“VAT does cause us problems – it adds such a lot to the cost. I don’t think people realise there is VAT on it,” she said. “We are busy and we have got a premium product that people are prepared to pay for but there will come a point where there is only so much they can take on.”


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