Insee Analyses · July 2026 · n° 123

At Least Three-Quarters of Agricultural Cost Increases Were Passed On to the Food Processors’ Factory-Gate Prices on the French Market

Between January 2021 and January 2023, agricultural producer prices rose by 30.7%, against a backdrop of post-Covid recovery, extreme weather events and geopolitical tensions. Over the same period, food processors' factory-gate prices for the French domestic market rose by 29.5%.

Food processors' price-setting behaviour plays a key role in the transmission of agricultural cost increases to sales prices. Between 2015 and 2023, agricultural inputs accounted for 35% of food processors' variable costs on average (alongside the cost of other inputs—energy, packaging, etc.—and labour costs). When agricultural input costs change, a firm-level estimate suggests that two‑thirds of these changes are passed on to these companies' sales prices, rising to three‑quarters for products sold on the French market. This transmission is gradual: it takes place over five quarters for products sold to retailers, but only three quarters for other industrial consumers, particularly other processors.

For the companies studied, the rise in agricultural input prices paid by food processors was 41%, leading to a 15% increase in their production costs in 2023 compared with 2021. With three‑quarters of this increase passed on to prices charged to retailers, it accounted for 42% of food industry price inflation over the period. This estimate is probably a lower bound, however, as it measures a company's response to a cost increase specific to itself, rather than the collective response of the sector to a widespread shock. In the context of 2021–2023, marked by simultaneous increases in all costs (not only agricultural inputs, but also energy inputs and labour costs), competitive pressure eased, and companies could have passed on more of their cost increases without fear of losing market share.