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Laid off from the forestry industry after 25 years on the job, he opened the Golden Bakery and Pizza shop on James Street about five years ago, but after a sudden and surge in wheat prices, he feels like he‘s being squeezed out of this too. “It‘s extremely hurtful to small businesses,” he said of the recent and dramatic increase. “When you go from a $9.99 bag of flour to a $20 bag to make bread, it‘s extremely high. It‘s more than doubled in a matter of about two to three weeks.” While he hasn‘t had to raise the prices on his products yet, he said that if his profit margins continue to shrink, it will become inevitable. “I‘m going to have to increase the price of bread by at least a dollar. And the same thing with our pizza,” he said. “We sell pizza for $12. I can‘t just go and say now that the price of flour‘s gone up, I‘m going to have to charge $15. Customers aren‘t going to buy it. And if they do still buy it, they‘re not going to buy it as often.” And Perna is certainly not alone in his frustration. The crunch is being felt by businesses and consumers across the country. “It‘s not an industry that is doing well at this time, and that‘s an understatement,” said Paul Hetherington, president of the Baking Association of Canada, based in Mississauga. “To say the situation is dire – I tend not to want to use words like that, but I think it is fair in this case.” Droughts in Australia, weather problems elsewhere, and possibly even an increased demand for corn to be used in the production of biofuels have caused a shortage in wheat yields, resulting in the high prices. World wheat stocks at the end of this marketing year are expected to be the lowest they‘ve been since the late 1970s, and in the United States, stocks are the tightest they‘ve been since just after the end of the Second World War, said Bruce Burnett of the Canadian Wheat Board. “It‘s a very, very tight situation,” he said. “World production has been under consumption in the last couple of years, so we have been drawing stocks down . . . and we‘ve finally hit levels that have made the market very, very concerned about supplies and rightly so.” Burnett said that generally, the situation has meant prices have doubled in most of the main wheat classes and are likely to remain high for at least the next 18 months. Over at the Vienna Bakery, owner Allan Krebs said he‘s now paying around $20 a bag for flour that just two months ago cost him around $10. “It‘s really shot up. The last two months have been just crazy,” he said. “My suppliers just say it‘s like nothing they‘ve ever seen before. Nobody knows what to predict.” So far, he too has managed to keep his prices the same, but knows he‘ll likely have to make some changes in the near future. “You can‘t double the price of your main commodity and keep prices down forever,” he said, adding that it‘s not going to be just bakers who feel the squeeze. “Livestock is eating grain, so that‘s going to drive up the price of meat; you‘ve got cereal, pasta, pizza, everything to do with flour,” he said. “Your overall grocery bills are probably going to be going up quite a bit.” Kivela Bakery owner Michael Setala was slightly more optimistic about the situation. “We‘re just going to wait and see what happens,” he said. “I‘m not too worried at this time, unless it really goes a lot higher. All the bread prices are going to go up – it‘s not just one of us. We‘re all in the same boat.” Top of Page |
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September 2, 2010, 8:22 am |