Expect to pay more for bread due to heavy rains in Canterbury, flooding in Australia and a knock-on effect from the war in Ukraine, a grain expert says.
According to Stats NZ, the price of bread has increased by 7.1% between May last year and May this year.
Ivan Lawrie, operations manager at Stichting Akkerbouwkundig Onderzoek, said a number of factors contributed to world wheat and flour prices and the price consumers paid for bread.
Wheat prices were up from $430 per ton last year to $630 this year. The cost of growing wheat also rose as fertilizer and fuel prices rose significantly, he said.
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Russia and Ukraine supplied 28% of the wheat traded worldwide. With the price of wheat rising by 50% worldwide, a 14 year highlightas a result of the war and a near standstill of exports from these countries†
However, consumers hadn’t yet felt the full impact of the war in Ukraine on bread prices, but the cost of wheat in a single loaf is said to have increased by about 20 cents since the start of the war, Lawrie said.
Before the war, the cost of wheat was between 40c and 45c of the cost of a loaf of bread. It would contribute about 60c now, he said.
New Zealand traditionally imported wheat for milling into flour for bread from Australia, but the world wheat price affected what bakers paid, Lawrie said.
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Ivan Lawrie says growers are showing interest in filling the wheat market gap left by international supply constraints.
The New Zealand price followed international prices loosely, but was mainly determined by the internal demand for animal feed. Feed wheat was easier to grow and yields were greater than wheat used for baking, Lawrie said.
While international supplies tightened due to Ukraine and other factors, local wheat demand and price had risen in line with international prices, Lawrie said.
New Zealand imported about 270,000 tons of milling wheat (wheat used for baking) each year, with about 100,000 tons from local harvests.
Widespread coverage of how the war in Ukraine affected global grain supplies meant that while the price of a loaf of bread hasn’t risen too drastically yet, there was heightened awareness among consumers of where their food came from and how global disruptions could affect it. . Consumers were insecure and realized there was no guarantee that local farmers could guarantee a steady supply of food, Lawrie said.
Heavy rainfall in Canterbury during this wheat crop meant not only a reduced harvest but also low-quality milled wheat had entered the market, he said.
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Sam Ellis, founder of Christchurch bakery Grizzly Baked Goods, says the price of flour in Canterbury has risen 20% since May, and he may need to raise bread prices soon.
Sam Ellis, owner of Christchurch bakery Grizzly Baked Goods, said he only sourced wheat flour from Canterbury, but expected a price hike for local flour as international supply came under pressure.
The reduced harvest for local growers had already meant that the bakery had to pay 20% more for flour since May this year.
“We hold onto it for a lifetime. It’s our main ingredient. Internally, we’re trying to nullify its effect by finding efficiencies in the business. The reality is, prices will have to go up. A 20% jump is a lot at once ‘ said Ellis.
Depending on the bread type, flour accounted for 10% to 20% of the cost of a loaf, Ellis said.
Lawrie said that as supply dwindled and wheat and grain prices rose, growers who had previously planted more lucrative crops would become interested in planting wheat. Local growers had already informed the foundation that they were planning to grow wheat because of the high demand from the mill.
In New Zealand, the milling of wheat for flour and wheat for animal feed were the main grain crops.
Lawrie said international supply restrictions were especially problematic for poorer African countries that depended solely on imports. International restrictions would affect food security in these countries, Lawrie said.
There was a slight easing in world prices following rumors that wheat from Ukraine would soon be exported through shipping routes unaffected by the war, Lawrie said.
Another factor that could soon affect the price of a loaf of bread was the increased cost of shipping food from Australia to New Zealand due to Covid restrictions, Lawrie said.
Floods in New South Wales affected crops and supply to some extent wheat to New Zealand†
Stats NZ indicated that wheat imports from Australia had remained relatively stable since last year.
Association of Bakers spokesperson Jane Petrie said all bakery products have been affected by the impact of Covid on supply chains and pressure on labor and costs.
The rise in freight costs due to Covid restrictions, as well as significant pressure on wheat prices from the war in Ukraine, had the biggest impact, Petrie said.
Goodman Fielder, owner of Edmonds flour, declined to comment.