Corn in the tank, no bread in the box

Lower wheat production hikes prices

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From pizza to pasta, bread, buns and bagels, the price of everything made from flour is increasing as producers pass on soaring wheat prices.

Annette Johnson, owner of Chicago Heights-based Cipriani's Pasta and Sauce, said prices for the fancy duram wheat flour used in her pasta products have jumped in the past six months.

"It's basically tripled in price and there are eggs in our pasta that have basically doubled, " she said. "You can absorb a few pennies, but flour's gone from 20 cents to 65 cents a pound. I've been in the food industry for 20 some years and I've never seen prices like this. They're even talking about shortages."

Because the company works from distributors, it takes 60 days to 90 days to increase the price of CiprianI's products, Johnson said.

"We've been getting price increases, but that takes time, so it's really been creating a tightening. I don't think it (increasing product prices) will affect us because everyone else is moving prices at the same pace."

The jump in wheat prices is being blamed on higher exports, the conversion of wheat crop land to corn that's being used for ethanol production, and weather conditions in Australia that caused a dismal 2007 wheat crop.

The Economic Research Service of the U.S. Department of Agriculture February wheat report says the 2007 year-end supply of wheat was at its lowest level since 1947-48. The season-average farm price projection is $6.45 to $6.85 per bushel, well above the record of $4.55 per bushel in 1995/1996, it said.

"Strong demand and ongoing sales and shipments of wheat are boosting prospects for U.S. wheat exports this month despite record high prices," the report says. "... For the year, global ending stocks of wheat are projected to be the lowest in 30 years."

Tina Beck, who owns Beck's Crown Bakery with her husband Frank, said the bakery buys 1,000 to 1,500 pounds of flour weekly.

"Everything that's made here is made from flour," Beck said. "Increases started in November and I don't think it's over yet. It's doubled in price and it's going up even more."

Flour price hikes are one of the major factors in the Beck's decision to raise bakery prices.

"We've gone up 10 percent across-the-board and we're hoping it's sufficient," she said. "Flour and everything else has increased: eggs, cream cheese, the cost of gas ... every week it's something else. It all eats away at our profit margin. You can only absorb it for so long as we did until the beginning of February."

Bob Wisz, president and owner of Doreen's Gourmet Frozen Pizza Inc. in Calumet City, called the situation "atrocious."

"We've had three major increases in the past year," he said. "We've been beaten up and we're still experiencing increases."

His company buys 8,000 to 10,000 pizza crusts made of wheat flour weekly from a Wisconsin manufacturer who has passed along price hikes based on escalating wheat costs.

"In the past 10 years, the cost of crusts has doubled," Wisz said. "All our commodity costs are up. Oregano is up 75 percent, but we can absorb that. With wheat and mozzarella it's different. We've been trimming our margins right along. We've been getting squeezed pretty bad in the last year."

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