Record wheat prices, albeit good for farmers, are driving up prices on everything from your morning cereal to your spaghetti dinner.
Some consumers are taking the rising costs in stride, while others are modifying their habits by baking bread, rolling pizza dough or buying in bulk before the next price hike.
Nationwide, consumers are facing the worst grocery inflation since the early 1990s, and nearly every grocery item tracked by the U.S. Labor Department has increased. Numbers released in mid-March showed that grocery costs have jumped 5.1 percent in 12 months.
Prices for bread and cereal products rose 1.8 percent in February, the largest monthly increase since 1975, according to the federal government. The price of a loaf of white bread rose 19 percent in the western U.S. since June.
Spurring the demand is a combination of factors, ranging from a series of wheat crop failures abroad to a weak U.S. dollar, soaring transportation costs and growing demand for wheat from surging populations in China and India.
Given the shortage, Montana is exporting the bulk of its wheat crops out of the country. For the first time in history, the value of Montana’s wheat crop crossed the billion-dollar mark, at $1.138 billion in 2007, according to federal agricultural officials.
“I call it the perfect storm with the worldwide shortage in wheat and the value of the dollar has gone down. We market most of our wheat in Montana out of the country,” said Peggy Stringer, director of the U.S. Department of Agriculture’s national agricultural statistic service in Montana’s field office.
Wheat prices, which have hovered around $3 to $4 a bushel for decades, shot up to about $10.50 a bushel in February.
Stringer said prices for durum wheat, used in many pastas, are higher still at $14.80 a bushel. Organic prices are even more, although her department doesn’t track organic crops. On March 31, she’ll have a clearer idea what types of crops Montana farmers intend to plant for the upcoming growing season. About 5.2 million acres were planted in wheat last year.
Many bakeries, thrust into the global competition for wheat, are feeling the pinch as the cost for their commodities are outpacing what they can charge consumers. The upshot has been devastating as some independent bakeries have closed in some parts of the country.
Several Missoula bakeries have said they’re coping with rising flour prices while trying to endure spikes in fuel, transportation and other costs facing many small businesses.
Christine Littig, coowner of Bernice’s Bakery, said they are dealing with the price increases “one day at a time.” The cost of a 50- pound bag of flour recently rose $6 and more increases are expected in early April. She said Bernice’s may streamline some offerings as they try to hold off on raising prices for a while.
“At this point, we’re trying not to pass it along to our clients,” she said. “With the recession word tossed around, we’re looking at streamlining. Bernice’s
makes close to 300 products. It is a heavy variety.
“We’re trying to choose who we want Bernice’s to be and how we want it to be. If we can decrease our overall consumption of flour, we may be able to withstand the increase” in wheat prices, Littig said.
Kate Ord, marketing director at Great Harvest Bread Co. in Dillon, said the increased wheat prices have been absorbed mostly by their franchise bakery owners. But customers seem to be willing to pay an estimated 20 cents more, from $4.75 to $5, for a loaf of honey whole wheat. “The people who come to our bakeries are bread connoisseurs, just like there are wine or chocolate or cheese connoisseurs,” she said. “It is the kind of bread people would bake on their own if they had the time.”
Jon Clarenbach, general manager at Le Petit Outre, said they’ve had to increase prices for some retail and wholesale goods by 20 percent to cope with the volatile markets. Prices have tripled in the last few years for the all-purpose flour they use, he said. “Our costs went up $2,500 a week this year.
We’re not changing what we make, we’re hoping the prices will stabilize in the next year,” Clarenbach said. “We’re watching what our returns are at grocery stores and trying to minimize our losses.”
Spokane Bakery Supply, which supplies Le Petit Outre, typically had monthly contracts for Montana wheat with General Mills in Great Falls. Since February, those contracts have become weekly because of the market fluctuations.
Chris Hicks, owner of Spokane Bakery Supply, mapped out the trend. A hundredweight of all-purpose bread flour more than doubled, from $12.34 in 2006 to $25.95 in January. Prices jumped again in March to $49 a hundredweight, he said. For growers and farmers, the higher returns are good news.
Paul Lambert, chief operating officer at Wheat Montana Farms, said they grow about 250,000 bushels of wheat each year in the Three Forks area, about 170 miles east of Missoula.
“We grow our own wheat, so we’re not affected so much on the supply side,” he said. But “we’ve been inundated with calls for flour and wheat from around the country from people who’ve experienced a tightening of supply and real increase of costs.”
He said the higher wheat prices took some people by surprise.
“People were lulled into a false sense of security that wheat would never go up, but it did,” he said. “The experts say this phenomenon will last for about two years.”
He and other growers say even as wheat prices have risen, other costs have climbed, including fuel, transportation, insurance, fertilizer and labor.
Third-generation farmer Jim Beery, 62, said he was recently able to sell 1,000 bushels for $20.82 a bushel in Wolf Point.
“Right now, we’re looking at an opportunity to make money,” he said. “That’s a really good thing. But as we’ve seen, the prices for everything that we have to purchase to go into the crop have gone up substantially.” Some consumers said they haven’t noticed the price increases. And bread is, well, bread and they’ll buy it along with other staples.
“I don’t pay attention to the price because it is a necessity,” said Marci McLean of Missoula.
Eric Bergoust, standing outside the Good Food Store, said his family saves money on clothing and other items besides food.
“I try to ignore food prices because you are what you eat,” he said.
Traci Scharfe, who owns two coffee stands in Missoula, said she’s noticed increases in the prices of muffins, bagels and other pastries, especially in the last two or three weeks. In the past, she might have added a coffee cake or specialty item to sell along with her java, but she thinks twice these days.
“As a coffee stand, you can’t raise your prices every month,” Scharfe said. “It’s tough for the little guys.”
Reporter Pamela. J. Podger can be reached at 523-5241 or at pamela.podger@missoulian.com.
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