FLOUR HAS GONE UP IN PRICE, BUT NOT EVERYWHERE
Bakery producers are sounding the alarm: flour has risen in price and, as a result, there is a risk that bread will become more expensive. And no matter how much they say that we should eat less bread and flour in general, for many Russians, loaves and long loaves remain the most important product on the table.
“In fact, in some regions after the May holidays we observed an increase in the cost of flour – in some places it amounted to 25-30 percent,” Dmitry Semenov, chairman of the Russian Union of Bakers, told KP.RU (his comment can be heard on KP Radio). – But the situation across the country is uneven. We are monitoring the situation in 75 regions where our enterprises are located, and growth was observed in the Central, Southern and North-Western Federal Districts, in particular in the Tambov, Volgograd, Tver, Vladimir and Ivanovo regions. But in Siberia, the Far East and the Urals we do not observe this. In some regions bread is even becoming cheaper.
WHO IS TO BLAME: EXPORTS, FREEZES, SPECULATIONS
The rise in flour prices is sometimes associated with frosts during the May holidays. There was less grain and, consequently, less flour. Is this so?
“Frosts damaged about 5% of the harvest,” Semyonov said. “It doesn’t matter. We harvested enough grain and this will not affect prices in any way. I just spoke with the director of a Volgodonsk enterprise; he does not buy flour, but grain and grinds it himself. He said that the price of wheat rose to 18 thousand rubles per tonne, and now it has returned to 15 thousand.
According to Semenov, linking price increases with frosts is “speculative market mechanisms.” In fact, manufacturers and traders actively use this technique to justify price increases by means of some well-known phenomena. For example, earlier, sharks in the coffee business, citing drought, tried to inappropriately increase world prices for their product – Komsomolskaya Pravda wrote about this.
But back to our breads. Another explanation for the price increase is that flour is being exported. Because the sale of cereals abroad is subject to protection duties and the conditions for flour exports are more lenient.
In this situation, will we have enough flour to make bread?
“Yes, there are individual signs,” Semenov agreed. – But, as the heads of enterprises in the regions told me, they are simply holding back flour and grain in the hope that these products will become more expensive. Some enterprises, hoping that prices will be set at a higher level, are now closing for maintenance, although they usually do so in August. But in general there is no shortage of grain or flour. I think that prices for flour and grain will stabilise.
HOW WILL THIS AFFECT BREAD?
Let’s take a regular 300-gram loaf of bread. Its selling price in one of the companies in the European part of Russia is 28.49 rubles (in stores – already 50 rubles). According to Semenov, the share of flour in the cost of a loaf is about 25%, in our case it is 7.1 rubles. An increase in the price of flour, even by 30%, is just over 2 rubles. In stores, a 300-gram sliced version costs 50 rubles.
For a more detailed breakdown of what a loaf of bread costs, check out the infographic.
WHY IS FREIGHT ACTUALLY INCREASING IN PRICE?
“But the biggest problem is the lack of staff and the sharp increase in logistics costs,” says Semenov. — This is what has and will have the biggest impact on costs. Our salaries are among the lowest in the food industry. Because of this, there is a huge shortage of staff. And we are forced to increase salaries. For example, in the Vladimir region, a baker working in a hot shop on a two-by-two basis can earn 37-39 thousand rubles. With the same schedule, a salesman in a shop receives 45 thousand, and an employee in a market warehouse receives 70-75 thousand rubles.
Officially
Russian Ministry of Agriculture: Flour supply for the baking industry far exceeds demand
“Currently, the situation on the bread and flour market is considered stable,” the Ministry of Agriculture informed KP. “As of June 26, the average domestic selling price of wheat flour is 24.9 rubles per kilogram. Since the end of last year, the cost of these products has increased by 2.9%, which is lower than the inflation rate. Now the price is 10.9% lower than in the same period in 2022. It is worth noting that producers of bakery and flour products are experiencing higher costs for transportation, packaging and related expenses.”
According to the department, last season’s grain harvest, even taking into account export supplies, more than covers the volume needed to fully supply the domestic market.
“According to industrialists, the supply of flour for the baking industry on the market far exceeds demand; there are no reports of product shortages by companies,” the Ministry of Agriculture said.
