Further flour price increases predicted as costs rocket
Published:  31 August, 2007

Millers and bakers are going through "hair tearing" times as wheat and commodity prices soar, says the National Association of British and Irish Millers (Nabim).

Now millers are warning that further flour price increases may be required, despite a rise this month. Breadmaking wheat prices are at record levels, doubling over the past 12 months leading to "hair tearing" times, said Nabim director general Alex Waugh.

Paul Matthews, joint MD of miller FWP Matthews, said: "We put our prices up £70 a week ago, but prices have gone through the roof since we made that decision; it is unprecedented, a worldwide problem. We think we will have to go up again, maybe £40 in October. If bakers don't put their prices up they will not be in business in six months."

Meanwhile, Carrs' MD Duncan Monroe commented following a flour price increase of £69 a tonne in August: "These wheat markets are horrendous. It is obvious we can't absorb costs, and a further significant increase can be expected fairly soon."

ADM Milling increased flour prices to £68.13 per tonne from 20 August. ADM marketing manager John Hastwell said it was now watching the situation very carefully and checking the prices of wheat by the hour.

The price for breadmaking wheat in the UK and Europe now exceeds £200 per tonne delivered to Liverpool, according to figures supplied by Nabim.

Last month's floods damaged grain crops in the UK, and a worldwide shortage of grain and demand for biofuels are also to blame, Nabim said.

Waugh told British Baker the UK's harvest was reported to be of variable quality and at least 10% smaller than expected. Wheat costs for flour millers are £500m higher than last year.

Meanwhile, suppliers report ingredients costs in general are spiralling. For example, soft fruit prices are up 150% year on year and cream prices up 30%. Butter and milk have also been hit, with 100% price increases on butter in the past 12 months. Gluten and yeast prices have also seen double-digit percentage growth.

Federation of Bakers director Gordon Polson said: "Cost increases of 100% in 12 months cannot be absorbed by bakers. It is inevitable that the cost of a loaf will continue to rise."

The National Association of Master Bakers (NA) said members need to increase prices by at least 10%. Gill Brooks-Lonican, chief executive, said: "Members are also facing a minimum wage increase, higher electricity costs and rents."

Craft baker Oliver Adams, with 28 shops in Northampton, has added an extra 7p a pound on a range of products. Greggs also indicated price increases of up to 10% could be needed.




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