The price of a loaf of bread is set to rise by between 40 and 60 cent as a result of rapidly rising international wheat prices, the Irish Bread Bakers' Association warned yesterday.
The Association said bread wheat on international commodity markets has doubled in price since September 2006 and over 200 jobs have been lost as the sector rationalises.
It described the rise in wheat prices as unprecedented and phenomenal and has placed "an almost intolerable burden" on Irish bread bakers. The Association declined to specify what effect this increase would have on bread prices, saying this could be interpreted by the Competition Authority as price-fixing.
However, calculations based on previous wheat price rises suggest the increase in bread prices could be as much as 40 per cent. The exact amount will depend on how much of the increase retailers decide to pass on to consumers.
The Irish Farmers' Association said the last time wheat prices increased, shoppers ended up paying two times the increase in raw material costs incurred by bakers. "Even with these increases, wheat still only accounts for 13 per cent of the loaf and is not the main input, as the IBBA claims," a spokesman said.
He added: "Historically, wheat prices had fallen in the last decade before this year's increase. There is no record of those decreases being passed back to shoppers". The IBBA says wheat prices have risen 30 per cent since September, 70 per cent in the preceding year and 40 per cent in the year before that.
Paul Kelly, director of Food and Drink Industry Ireland, speaking on behalf of the bakers' association, blamed the trend on increasing demand internationally and significantly decreased supply.
"The bakery sector is of significant importance to the Irish economy, employing over 4,000 individuals. However, the cost of doing business in today's market is becoming increasingly difficult. We have already seen a number of bakeries close over the past few years because of cost pressures. I would not be surprised to see more casualties, as businesses can't continue to absorb these kinds of cost increases."
While the EU and the US both plan to expand the land planted for wheat next year, the effect of this will not be felt for a number of years.
A number of factors explain the rise in wheat prices. Fertiliser, transport and fuel costs have been rising, while bad weather and drought, respectively, have affected yields in Europe and Australia. Demand is growing in China, while Russia is seeking to restrict exports.