Keith Molholm eventually got used to people telling him, "You're not at Keebler anymore." After working for the cookie company as a purchasing executive, he changed gears and entered the organic industry as vice president of operations for Rudi's Organic Bakery, Boulder Colo.
Not only did the new job bring new responsibilities in a new location, but it also brought new headaches and challenges known only to the growing number of organic bakeries throughout the country.
The statistics are plenty and mindboggling. Almost monthly, a new organic group or association comes out with organic statistics that tout double-, triple-and even quadruple-digit growth.
Simply put, organics have arrived. And, whereas many skeptics question the legs of low-carbohydrate diets, almost everyone agrees that the organic industry will continue to demand more shelf space at not only specialty supermarkets such as Whole Foods, but also at conventional supermarkets.
The growth of this category is good news for the baking industry. First, with a little knowledge and training, manufacturing quality organic bakery foods can be accomplished.
Second, despite an official organic certification process, becoming an organic manufacturer is not as hard as it may appear to some bakers. According to Steve Shapiro, French Meadow Bakery's vice president, the process is fairly simple and standardized after completing the initial influx of paperwork.
However, the organic skies are not always blue and becoming a certified organic baker has its challenges. Central to these challenges is the sourcing and purchasing of organic ingredients.
The cornerstone of all bakery foods is flour, and organic flour suppliers are multiplying as the category grows. Thankfully, finding organic flour is not a difficult challenge. However, finding a consistent flour supply at a reasonable price can be difficult.
"Flour has become less of a problem over the years as more supply is available and the mills are getting a more consistent source," Shapiro says.
However, "less of a problem" is still a problem and organic bakers must keep a close eye on their flour consistency to ensure a quality product. According to Molholm, Rudi's Organic Bakery recently had a five-month stretch where its flour quality was ideal. "And all of a sudden, in a two-week period, our volume and the height of our loaves changed," Molholm says. After calling the miller, Molholm learned that the supplier had a shortage of flour and had to bring in new streams of flour from a different region of the country.
After this breakdown in communication, Rudi's Organic Bakery started demanding that its flour supplier fax the bakery comprehensive information about every incoming load of flour.
Another issue with purchasing organic flour is securing a consistent price. Although the price of organic flour has gone down in recent years, it's still more than conventional flour. And unlike conventional flour, which can be hedged to obtain a consistent price, the organic industry has yet to setup an organic flour futures market. Therefore, organic bakers are forced to deal with fluctuating flour prices.
However, organic bakers can take measures to protect themselves from inconsistent flour prices. One of these measures is securing long-term contracts."We do a lot of contracting with mills, so we stabilize our prices by buying for the year," Shapiro says. "It's not a true hedge, but we get fairly stable prices for the year."
However, Molholm warns that not all flour suppliers are willing to set up price contracts for the year. "If you talk to different flour companies, it's a day and night difference," Molholm says.
For example, Molholm says that Rudi's Organic Bakery tried to lock in a price for a year with one supplier, and even wanted to look forward to the upcoming crop. However, the flour company was not comfortable offering a year contract because it was unsure of its supply. Conversely, another of Rudi's Organic Bakery's flour suppliers were confident in their supply and had no problem setting up a future crop price.
"It's the difference in the size of the organization," Molholm states. Organic suppliers run the gamut from large to small, so it's necessary to develop a close relationship with the flour supplier and do homework on where they are buying their flour from and how the crops are performing.
Minor ingredients, major problems
Securing an organic flour supply that is consistent in both price and quality has its challenges, but organic bakers have many tools to protect themselves. Unfortunately, sourcing minor ingredients poses the same problems, but there are fewer tools to overcome these challenges.
"The biggest issue cost wise and source wise are all the minor ingredients," Shapiro says.
When a conventional baker wants to formulate a new and unique product, the ingredients are usually a phone call away. Organic bakers with the same new product idea may have to spend significant time finding an organic ingredient, and then ensuring that they can obtain a consistent supply.
"The national organic standard requires us to look for and use organic ingredients if they are available," Shapiro says. "Some of these minor ingredients take a while to find approved sources."
Besides researching the organic industry and its suppliers, organic bakers also can use organic brokers to source hard to find minor ingredients.
"We use a broker network, and we've found it reliable. If an ingredient is available, brokers usually know about it or know someone who knows about it."
- Keith Molholm Rudi's Organic Bakery
"We use a broker network, and we've found it reliable," Molholm says. "If an ingredient is available, brokers usually know about it or know someone who knows about it."
Brokers also can help organic bakers source ingredients from foreign suppliers. For example, Molholm says that there is only one supplier of vital wheat gluten in the United States. As a result, various brokers are looking at European suppliers for this ingredient.
Rudi's Organic Bakery uses a broker network to source some of its hard to find ingredients.
Finding more than one source for every ingredient is an essential aspect of successful organic baking. "You don't want to use an ingredient unless you have at least two or three potential routes to get that ingredient," Shapiro says.
Finding multiple sources for all ingredients, despite how minor these ingredients may appear, protects the baker on many levels. For starters, multiple suppliers per ingredient ensures that a baker is always protected in case a primary supplier loses his crop or fails to be recertified as organic.
"And not only that, the American capital system is a good one. Competition is good," Molholm says.
Prices for organic ingredients are high, and relying on only one supplier for a minor ingredient puts a bakery at the mercy of its supplier when it comes to price. However, with multiple suppliers, a baker can change primary suppliers if the price becomes to high to secure an ideal margin.
To operate a successful organic bakery, one must borrow a motto from the Boy Scouts of America and "Be Prepared." Organic baking has its challenges, but all of them can be overcome by preparation. By defining a plan, finding multiple suppliers and hedging when possible, any bakery can capitalize on the growing organic marketplace.