Wheat prices rising for local bakers; Prices going up on baked goods, beer, pasta
With the start of the holiday season here, local bakeries are tightening their belts and trying desperately to absorb the rising costs of one of their most important raw materials.
"It used to be about $18 for a 100 pound bag of flour, now it's up around $30 a bag," "It hurts, especially coming into the holidays. We have been absorbing it right now, we don't want to drive customers away, but I don't know how long we can tough it out."
Andyman Dessert and Baking Co. uses 800 pounds of flour a week to make baked goods from scratch. From bread to muffins to cakes, Hurd is considering increasing prices across the board to absorb the cost.
"Bakers are attempting to ride it out," . "We don't want our customers to get pinched, but it is really pinching us."
Andyman bakery is gearing up for Thanksgiving, when pie sales go through the roof. Last Thanksgiving, they sold 400 pies and are expecting the demand to be the same this year.
Bakers have had to raise prices by 10 percent on just about everything recently to make up the difference he has seen in the price of flour and corn syrup. He speculates a number of factors are driving costs up, including gas prices and the use of wheat to subsidize other countries. Morris uses about 2,000 pounds of flour a week to make everything from bread to wedding cakes. "Even the smaller flour companies, such as King Arthur are going up," Morris said. "I think they are on their way up, and I don't think they will ever come down."
"I haven't increased prices, but unfortunately I have to in the near future," said Greta Reineke, owner of Greta's Grains on Pleasant Street in Newburyport, while echoing the sentiment of other bakery owners. "I have to do it in order to survive."
The effects of skyrocketing wheat prices are not just seen in the price of bread and baked goods but also in beer. At The Tap on Washington St. in Haverhill, prices may be going up soon. Brewers, such as David Labbe at The Tap, are watching Budweiser to see if they increase their prices, which are expected to rise 25 percent. Once that happens, smaller breweries will follow.
But it doesn't end with beer and bread.
Pasta, crackers, snacks and desserts of all kinds, including cookies and cakes, even cattle feed and grain for horses, are expected to get more expensive in the coming weeks.
Eating the cost
Supermarket chains like Stop & Shop and Shaw's say they don't want to raise their prices over $2.99 for a 1-pound loaf of bread but will soon be forced, said Chuck Brandano, who co-owns the wholesale bakery Multi-Grains. He said some of his clients now are requesting 14-ounce loaves of bread for a lower price. Some restaurants may even start charging for bread served in baskets at the table, he said.
"I think we are definitely seeing an effect," . "It's not as busy."
On top of the rising cost of wheat, other raw material prices are more expensive, too.
"Wheat isn't bothering me as much as the egg prices. The egg prices are killing me," Judy Ravaris, owner of Spinach Pie North in the Newburyport Tannery said. "Everything is going up, all raw materials.
"If I had any idea why, I would figure out a way to stop it," Ravaris said with a laugh. "I make a lot of quiche, so the egg prices are what I notice most."
Reineke agreed with Ravaris.
"Everything is going up like crazy," Reineke said.
"The last year was the worst," she said. "Everything went up - delivery charges because of higher fuel charges, then sugar, flour, cream, milk, butter, eggs. You name it. Now, flour, the biggest ingredient, is going up."
"The increase of the wheat will really have an impact. ... especially the organic stuff - that's even worse because the supply is lower," she said.
She hasn't increased her prices yet but expects to soon.
"You can only absorb so much," she said. "You get to a point where you can't do it anymore."
Global economy, local impact
People in the bread, beer and pasta business blame the high cost of wheat and other grains on a variety of factors that seem to have converged in the last couple of months.
Some of the reasons cited:
* Poor weather - droughts in one part of the world and rain and freezing temperatures in other parts have reduced crop yields in Australia, Canada, Argentina and the United States.
* Farmers worldwide are planting corn to take advantage of the high demand - and price - for ethanol, reducing the acreage devoted to wheat and other grains.
* Speculators working for Wall Street hedge funds are buying up grain in large quantities and then selling it for a profit, further driving up the price.
* More U.S. wheat is going overseas as a result of the weak dollar and increasing demand from rapidly developing countries like China and India.