Running a bakery doesn’t seem to be a frightening proposition, but it’s taken on some ominous undertones in recent months.
“It’s kind of a scary time right now,” said Andrew Siegel, who owns York-based When Pigs Fly bakery with his brother, Ron. “The scariest thing is the whole fundamental change that’s taken place in the last couple of months.”
That fundamental change is a dramatic leap in flour prices that’s pinching profits and forcing bakers, pizza makers and others who depend on dough to cut other expenses and raise prices.
Martha Elkus, the owner of Big Sky Bread Co. in Portland, said her flour costs have nearly tripled from a year ago and are up 50 percent since the beginning of January.
A 50-pound bag of flour cost about $11 in February 2007, she said, and is now about $30. At about 60 bags per week, that means her weekly flour bill has jumped from less than $700 a year ago to about $1,800 now. The person delivering her flour recently joked that he might need an armed guard, Elkus said.
Poor weather in major wheat-producing countries has hurt harvests in recent years, and world stockpiles of the grain are at 60-year lows.
Australia – the world’s second largest wheat exporter behind the United States – suffered a drought that cut harvests dramatically for the last three years, while the world’s two most populous countries, China and India, are buying more wheat to feed growing populations.
The weakening U.S. dollar has made American wheat more attractive to overseas buyers, and that enticed farmers to export more of their crop. The weak dollar also means that imported wheat is more expensive for U.S. buyers.
And farmers are shifting production to corn because of high demand and prices for that grain, used to create ethanol, an alternative fuel for cars and trucks.
In response to rising costs, Elkus increased her bread prices in November, as flour prices began their steep ascent. Last month, she had to raise prices another 5 percent across-the-board, pushing the price of her most popular bread, honey whole wheat, from $3.95 a loaf in October to $4.50 now.
To control expenses, she’s also reminded workers to measure carefully and to take care in removing loaves from the oven to make sure nothing is dropped.
“We can’t afford to lose a batch of bread,” she said. “What’s sort of scary is that there’s no end in sight, and I’ve been told by my supplier that I’m going to look at $30 (a bag) as a good price.”
Jim Amaral, the owner of Borealis Breads, is already at that point.
Amaral said he paid $8 for a bag of flour in 2005, $10 in 2006 and $12 last year. His latest order cost $20 a bag, and his supplier said the next one will be $39 a bag.
Amaral said he will have to raise his prices soon. He doesn’t have a set amount in mind yet, but he knows the increase will be “significant.” He will have to factor in higher costs for wheat and other ingredients, staying competitive and avoiding the need for another increase in short order.
“Given the tight economic times, it’s probably going to have some impact on our sales,” Amaral said.
Other prices are also hitting bakers hard, he noted, including propane for heating ovens and fuel for delivery trucks. And many of the other ingredients that go into bread have been getting pricier, too, he said.
Unfortunately for David Lengyel, who owns Willows Pizza and Restaurant at Cash Corner in South Portland, dealing with higher prices for core ingredients is a familiar situation.
Lengyel said he’s dealt with higher cheese prices – up about 40 percent in the last year – as well as increases in the price of vegetables and other toppings. Still, the sharp rise in flour prices caught him by surprise.
“It’s the one thing you saw for years that didn’t change,” Lengyel said. The increase, he said, forced him to raise prices about 5 percent recently, after trying to hold off despite higher flour costs
Lengyel said his restaurant is doing well in an uncertain economy, with sales and customer counts both running about 12 percent ahead of last year.
“Which is great, but my expenses are up about 30 percent,” he said, adding that a supplier told him to expect an increase in tomato prices this week.
Bakers said they, too, are seeing higher prices for other ingredients in bread, making the increase in flour prices hurt that much more. Elkus said honey prices are up 25 percent this year and another 10 percent hike is expected soon, while Siegel said When Pigs Fly also is dealing with higher prices on a number of ingredients.
He said the price of apples has risen from about $2 a pound to $4.25, and the cost of walnuts is up from $65 for 30 pounds to $165, factors that contributed to the recent decision to raise prices for his breads about 10 percent.
“Flour is just the biggest thing we use,” Siegel said, “but there’s not one food item that hasn’t gone up. Most of it has gone up 100 to 150 percent.”
Siegel, like other bakers, said his price increase was made reluctantly because of the recognition that customers are also facing higher costs for an array of items and having to make choices on what things they will do without.
“I don’t know what people are going to cut back on,” he said. “We just hope it’s not bread.”
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