Soaring flour costs trigger price hike for baked goods
BUSINESS
BY MARY LANCASTER INDEPENDENT WRITER
Anumber of factors play into the equation, but there is no doubt that the current, unprecedented high cost of flour is forcing consumers to shell out more dough than ever for a simple loaf of bread. Nationwide, the prices for bread, pizza, cakes and other baked goods are spiraling as businesses try to cover their expenses in response to wholesale flour prices that have tripled within a year and show no sign of dropping.

It has taken Maggie Detmer three agonizing weeks to figure out what she will charge customers when her Nantucket Bake Shop opens for the year on April 24. Though she did not raise any prices last year, her flour bills have shot up from $11 per 50 lb. bag of flour to $24 a bag just since November. Detmer investigated recent bakery prices in New England and New York City before deciding her business needs to increase prices for most baked goods on an average of 15 to 20 percent. She and other local bakers stressed that while the price of flour has spiked, so have other costs relating to wheat production, the transportation of flour and the price of products used in baking such as dairy foods and cooking oils.

"We're just getting hammered," said Detmer. "It's everywhere. It's grim, and I'm not really sure what the solution is."

Detmer added that she has talked with about a half-dozen island people in the wedding business who say they anticipate a poor year, not just for wedding cake bakers, but in a trickle-down situation affecting caterers, function organizers and those who rent venues because of overall escalating costs for fuel and wedding products.

"We're not going to have one of those months when there's 20 weddings in June. It's not going to happpen," she said. "It's all combining to make me think it's not going to be a great year."

Samantha Tryce at Daily Breads knows that owner Liz Holland, who is vacationing, has raised some of her baked good prices including that for pizza slices. She said flour has gone up 300 percent since March 2007 and the prices for sugar and blueberries went up this year after last year's hike in milk, butter, eggs and coffee beans.

"We're just playing it by ear. Each week we get a price on flour. It has evened out right now - it hasn't fluctuated in the last two weeks - but it's still extremely high," said Tryce. "We're working with Fooods [for Here and There] to order flour together and we've also been talking to [Something Natural owner] Matt Fee to try to collaborate on orders. We're trying to figure out the cheapest way possible."

Fee noted the supply and demand factor, resulting in part because since the U.S. dollar has lost value it has become more affordable for other countries to purchase American wheat. It has also become an important commodity for countries that have experienced adverse weather destroying wheat crops. Further, he pointed out that grain supplies are affected because farmers are being paid well to switch from growing wheat to growing corn that can be converted to ethanol as a gas additive.

"Also, all the growers' inputs (transportation, fertilizer and oil costs) are increasing," said Fee. "It used to be approximately $5 a 50 lb. bag to get flour from Hyannis to Nantucket and it's $12 now. The customers and island residents are getting squeezed from every direction and some of it is out of our control. It makes it difficult to predict what to do for the year.

"There is a theory that we are entering the end of cheap food," he added, estimating his bread will go up about 20 percent just to cover the cost of flour. "The oil that we used allowed us to farm the way we used to. There was more than enough there. Now the demand is outstripping the supply of oil. I've been seeing this coming for the last couple of years and I'm worried."

Jason Bridges, manager at Fooods for Here and There, said they recently raised the cost of pizza just enough to break even with flour expenses.

"I've been in the restaurant business 15 years and I've never seen it like this. Everything else is going up too, but flour is going up the most," he said. "I'm raising the price but I'm only keeping up with the cost to the purveyors. It's a delicate balance - you need to raise [prices] so you don't have to close the doors, but not so that people don't come anymore. Flour is supposedly going to go up again. It's going to get worse before it gets better. I don't know if I can raise the prices again."

Bridges said traditionally he has ensured that three pizzas were still available at night in case customers stopped in just before closing. That practice can no longer continue.

"Not anymore. I can't throw away three pizzas," he said.

Sophie T's pizza co-owner Rob Noll said he has not bumped up his prices yet but that it is only a matter of time.

"It's a larger scope than just flour; it's shipping the grain, it's feeding the grain to cattle that make milk that makes cheese, and it's feeding people in China. And it's all from the midwest and it's trucked and trained everywhere. Everybody keeps saying that the big jump is coming down the road, a much bigger jump than what we've just experienced," said Noll. "The economists say this isn't just a spike, this is the way it's going to stay so we'd better get used to it. It's driving everything - the bread we use for sandwiches and the pizza - it hurts. You don't want to give [your customers] sticker shock, but you want to stay in business."

Matt Stein, co-owner of Blue Water Bakery, said his flour cost went from $12 for a 50 lb. bag to $35 in the last four months, so about a month ago he had to raise the prices on baked goods and will likely do so again before summer.

"We've held off as long as we can in the hope the situation would change, but the way it's been explained to me is that this is going to be a long road," he said. "It's everything and it's everything at once. From my perspective it's very scary."

It is scary to Tiina and Don Polvere, Jr., too, who until now have had a lucrative business with their Nantucket Cake Company. Polvere said they had to boost the price for a six-inch cake from $40 to $60 due to the cost of ingredients, and though they still have customers some are shying away or looking for a cheaper alternative. So far, they have only conferred with one local family about a wedding cake, have no other definite wedding bookings, and Monday night received an email from someone inquiring about cupcakes instead of a regular cake for a wedding.

"The rising cost of cakes may be preventing people from having weddings on Nantucket. The times are changing and the prices are affecting everybody. It's definitely going to be a lean year for the weddings and the cakes," said Polvere. "Some of these smaller business industries are getting eaten up. There is no alternative but to go up on prices and

hope your customer understands." I