3.24.2008 9:32 AM

Bread Lovers Beware

Bakeries Forced to Raise Prices, Change Recipes Due to Food Costs

Bakery prices go up due to soaring food prices.

Photo: Dan Moore / Istock

By Annie Bell Muzaurieta

It's tough to face higher prices for flour, eggs, and milk at the grocery store. It might be tougher to then realize that all of your food purchases are affected by this price increase, and your favorite bakery has likely had to up the cost of bagels, bread, and pastries.

According to Crain's New York Business, bakers are struggling to cope with the quintupling in the price of high-end wheat flour - the worst ever faced by bakers - which resulted as global demand increased and because farmers switched their crops from wheat to corn to deal with the ethanol boom.

In addition, the article says that last year the cost of soybean oil rose 67 percent, prices tripled for some egg products, doubled for milk, and increased 50 percent for natural gas, which bakers use to fire their ovens. One baker refers to this broad price increase as "the perfect storm," and another says his bagel shop's flour bill for the 12 months ending in June will total $5.7 million - $3.8 million more than it was in the previous 12 months.

To cope, some bakeries have hired consultants to help them deal with the commodities market, and others have simply had to raise the prices of their goods. Zaro's Bakery is reducing the amount of goods produced so there are fewer leftovers. Balthazar has switched to conventional flour from organic, protein-rich flour.

And it gets worse. City Harvest, a charitable organization that collects excess food from bakeries and other businesses and distributes it to food pantries and homeless shelters, has been hurt by the effects of rising food costs too. According to the article, City Harvest had to cope with a 53,000-pound reduction in donated baked goods in January and February compared to last year's numbers.

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