Bread price in the spotlight again
9 July 2009, 22:02
By Craig McKune
The price of wheat has plummeted in the past year, but don't expect the price you pay for a loaf of bread to follow.
While wheat prices dropped 34 percent between March 2008 and March this year, the price of a 700g loaf of white bread went up 23 percent and a loaf of brown bread 25 percent over the same period.
Supermarkets - currently being investigated by the Competition Commission - have said they can't explain why this is happening, and have pointed to their suppliers for an explanation.
Premier Foods, which manufactures and distributes Blue Ribbon breads, and economists say bread suppliers are now recouping costs from a time when wheat prices rocketed between 2006 and last year.
They also blame rising labour and electricity costs for the fact that, though the bread price has been stable since March and in some cases has fallen, on the whole bread prices have not followed plummeting wheat prices downward.
According to National Chamber of Milling chief executive Jannie de Villiers and Andre Jooste, an economist at the National Agricultural Marketing Council, there is a lag in the retail price of bread relative to wheat: When the cost of wheat goes up or down, bread prices follow about three to four months later.
But it has now been 15 months since wheat costs last peaked, with no significant drop being seen in the bread price.
Jooste said bread manufacturers were now in the process of recouping costs from a period when wheat and fuel costs had increased significantly while the bread price lagged.
De Villiers said millers and bakeries could be "building up reserves for when costs go up again".
But because of this, he said, these companies needed to be watched closely in case they boosted their bread prices along with increases in input costs.
He said wheat, electricity, transport and labour dominated the cost of a loaf of bread.
Read the full story in Friday's editions of The Cape Times newspaper.
The price of wheat has plummeted in the past year, but don't expect the price you pay for a loaf of bread to follow.
While wheat prices dropped 34 percent between March 2008 and March this year, the price of a 700g loaf of white bread went up 23 percent and a loaf of brown bread 25 percent over the same period.
Supermarkets - currently being investigated by the Competition Commission - have said they can't explain why this is happening, and have pointed to their suppliers for an explanation.
Premier Foods, which manufactures and distributes Blue Ribbon breads, and economists say bread suppliers are now recouping costs from a time when wheat prices rocketed between 2006 and last year.
They also blame rising labour and electricity costs for the fact that, though the bread price has been stable since March and in some cases has fallen, on the whole bread prices have not followed plummeting wheat prices downward.
According to National Chamber of Milling chief executive Jannie de Villiers and Andre Jooste, an economist at the National Agricultural Marketing Council, there is a lag in the retail price of bread relative to wheat: When the cost of wheat goes up or down, bread prices follow about three to four months later.
But it has now been 15 months since wheat costs last peaked, with no significant drop being seen in the bread price.
Jooste said bread manufacturers were now in the process of recouping costs from a period when wheat and fuel costs had increased significantly while the bread price lagged.
De Villiers said millers and bakeries could be "building up reserves for when costs go up again".
But because of this, he said, these companies needed to be watched closely in case they boosted their bread prices along with increases in input costs.
He said wheat, electricity, transport and labour dominated the cost of a loaf of bread.
Cape Town
