videoBread will cost considerably more until well into 2023 due to the war in Ukraine and the sanctions against Russia. According to the bakery industry, bread will be twice as expensive. Cookies, crackers and pizza do not escape the dance either.
Together with Russia, Ukraine accounts for 29 percent of world wheat production. But grain is no longer coming out of Ukraine because of the conflict and remains in Russia because of Western sanctions. “Grain from Ukraine mainly goes to Southern Europe, Africa and the Middle East,” says Sebastiaan Schreijen, consumer and food analyst at Rabobank. ,,We mainly get it from France, Germany and a little bit from the Netherlands. But all countries that misunderstand now will also get it from there. So there will be shortages and the price will rise.”
If the war in Ukraine and the sanctions against Russia and Belarus last longer than six months and the Black Sea ports remain closed, the grain price could rise to 550 euros per ton, according to Schreijen. “A year ago we became uneasy when the wheat price exceeded 180 euros per tonne,” says director Wim Kannegieter of the Dutch Bakery Association (NVB). “Now analysts are predicting at least a doubling.”
Five euro
And that’s just wheat. Other food commodity prices are also skyrocketing, not to mention the price of gas used to fire bakery ovens. “On average, a kilo of bread costs 2.71 euros. That can sometimes be an amount well over five euros. And bread is a basic necessity of life.”
The NVB represents large industrial bakeries, which account for 85 percent of the Dutch bread market and mostly supply supermarkets, bakery chains and the catering industry. “The purchasing prices there are largely fixed, at a few cents per kilo of bread. We really cannot bear these kinds of cost increases.”
No more bread
Everything has suddenly become more expensive
Whether supers are willing to pay more depends on their relationship with the baker. But if they tighten the thumbscrews, it could come back like a boomerang, Kannegieter warns. ,,Our members often produce exclusively for one chain. If there are victims among bakeries, this has immediate consequences; those supermarkets will then no longer have bread.”
Bakeries hold their breath. “Since the outbreak of the war, our wheat price has risen by 30 percent,” says a large catering baker in Amsterdam. It obtains ‘a very large part’ of the grain from suppliers who in turn get it from Ukraine.
“They pass on price increases directly to us. You are confronted with that from one day to the next. The offer is still there, thankfully. As long as you pay for it.” And it just stayed with grain. “Everything has suddenly become more expensive.”
He sees no other alternative than a sharp price increase. “There is nothing that can be adjusted to the ingredients or to the production. And we can’t just say we’re going to stop. The hospitality industry depends on us.”
Also pizza more expensive
It’s not just about bread. New York Pizza CEO Philippe Vorst looks perplexed every day at the wheat price on the leading Parisian agricultural products fair. A wheat contract for March, which expires on the 22nd, cost 396.25 euros per tonne on Friday, but has already stood at 426 euros for a while.
The pizza giant buys its ingredients from suppliers who look directly at such fair prices. “Last autumn the wheat price already rose above 300 euros, due to the raw materials crisis,” says Vorst. “That was already exceptional. I can’t believe what’s happening now. Bloem is already above 400 euros.”
New York Pizza also sees no other way out than to raise prices. “We really cannot absorb price increases of 30, 40 percent ourselves. Pizza is getting more expensive.” Not only at its more than 200 franchise stores, the bakery in Amstelveen also produces dough balls for pizza bakers in twenty European countries. ,,For the time being, we are still manageable, but our suppliers can no longer deliver at the agreed prices. One of our pasta partners only has four months of stock left.”
No grain in the soil
Even if that war is over in six weeks, there won’t be any grain left in the soil
If it is up to the speculators on the Paris agro-exchange, the consequences of the Ukraine crisis on the price of our food will have ebbed around September 2023 at the earliest. ,,The next six weeks must be sown in Ukraine for the new harvest,’ says bakery foreman Kannegieter. “But they have something else on their mind now.”
“Even if the war is over in six weeks, there won’t be any grain left in the soil. That means that soon 28 percent of the world production of wheat will simply not come.” The futures contracts for September and March 2023 are already above 300 euros, a price that will continue to rise. “We will continue to eat our bread,” he expects. “Bread is a staple food. But consumers will certainly buy more straightforward bread instead of luxury bread.”
Due to these price increases, an Italian ‘pasta crisis’ is also expected:
Chrysanthemums are getting cheaper
Due to the Ukraine war, the prices of other raw materials for our food are also rising rapidly. For example, Russia and Ukraine are responsible for 75 percent of sunflower oil exports, crucial for everyone who bakes.
Meat and chicken are also becoming more expensive. “Sixty percent of the feed maize for Dutch pigs and chickens comes from Ukraine,” says food analyst Schreijen. “Feed prices account for up to 80 percent of the costs for farmers. Just calculate what that could mean for the final price.”
Increasing the harvest here will not be easy. This weekend, Russia – with Belarus one of the largest producers – halted fertilizer exports, if not already hit by sanctions. “The question now is whether farmers will use more animal manure, with all the consequences for the environment.”
However, sanctions also have a bitter advantage. “Due to the cessation of exports to Russia, we have more pork left.” There is also a threat of a surplus of eggs, pears, bananas and even chrysanthemums, which could cause prices to drop significantly. But those are temporary consequences. That will not compensate for price increases elsewhere.”
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