The chief executive of Tate & Lyle called for calm over global food price inflation yesterday and said he was confident that commodity prices would fall in two to three years.

Iain Ferguson said history showed that farmers would react to the higher prices by growing more agricultural produce.

The comments came as he blamed higher freight costs and the weak dollar for an 11 per cent fall in annual pretax profits to £244 million for the year to March 31.

Group revenue rose £200 million to £3.4 billion.

Mr Ferguson said: “Food inflation is powerful but the effect on people’s income is not as much as it would have been in the past. In the 1950s, around 40 per cent of our disposable income went on food, and now it’s 10 per cent.

“And if you look back over history, what tends to happen when prices are higher is that farmers invest more and yields start to increase.”

Mr Ferguson said that the group’s food and industrial ingredients division had largely been successful in passing on the higher cost of corn to customers.

However, a 40 to 50 per cent rise in freight costs saw Tate & Lyle’s international sugar trading division suffer a £9 million loss in the year, against a £22 million profit a year earlier.

Shares in the group fell by more than 2 per cent, or 11¾p, to 473¼p.

The losses in the sugar division had been expected following a profit warning last September that wiped nearly a third off Tate & Lyle’s market value.

Analysts said they feared that higher corn prices could still hit the group in this autumn’s pricing round.

They added that Tate & Lyle’s energy bill could rise by as much as £35 million.

The group, famous for Lyle’s Golden Syrup, has undergone restructuring after a dismal 2007. It was hit by the weak dollar, higher European corn costs and lower sugar prices following European Union reforms.

It also suffered a collapse in profits early last year at Sucralose, its artificial sweetener division, which trades under the Splenda brand.

John Parker, Deutsche Bank analyst, said: “Risks remain, but with so much going wrong in 2007-08 we expect a better year ahead.”

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