Soaring wheat and grain prices — a hot issue affecting bakeries from the tiniest independent retailer to the largest industrial bakery plant — is finally getting some media attention.
The Wall Street Journal's Feb. 14th edition featured an article “More Grain Production Sought” that offers a good explanation of the conundrum we're in. You might want to have that article at the ready to help explain to customers why raising your prices is essential.
The call for help is coming from across the baking industry. Retail bakers are screaming about it on RBA's “Baker to Baker” e-group. National bakery chains, such as Panera Bread, which raised its retail prices by 2.5 percent in November, are blaming the rising wheat costs for lost margins in 2007.
Of course, wholesale bakers are being slammed by the inflated flour costs and are having difficulty raising their own prices high enough to cover that cost. The Wall Street Journal article quoted Len Amoroso of Amoroso's Baking Co. in Philadelphia paying $48 per 100 pounds of flour from hard red spring wheat. A year ago, he paid $14.60 for that amount. That jump is astounding.
The American Bakers Association (ABA) is even planning a “Band of Bakers” march on Washington, D.C. next month.
ABA President and C.E.O. Robb MacKie released a statement on behalf of his constituents in the baking industry which is pretty clear where industrial bakers stand: “Extraordinary times call for extraordinary measures. With the critically low reserves and severe conditions in the wheat markets, ABA is calling on all bakers to come to Washington and demand action by USDA and Congress.”
There are many factors to blame for the dilemma: demand for bio fuels, the federal conservation program in place to stop overproduction of wheat, poor growing seasons in key wheat producing nations, low grain reserves, etc. All factors have evolved into critical mass that is leading to the state we're in today.
You can't help but raise your prices under this pressure, and I'm not sure the best way to get this across to your customers. I guess continue to be as loud as you can so someone will notice — local media, the federal government, your consumers.
It feels like they're starting to notice, but we need to keep the momentum rolling forward as one big voice. If you're interested in learning more about ABA's Band of Bakers march, March 12, in Washington, D.C., visit www.americanbakers.org.
One good thing that seems to be coming out of this is the common ground among the little guys and the big guys in the baking industry.