The price of flour is to rise substantially. Miller Rank Hovis announced on Tuesday of this week that it would be increasing the price of its bread-making flours by £68.75 per tonne (£1.10 per 16kg) and the price of its soft flours for making cakes and biscuits by £53.13 per tonne (£0.85 per 16kg) from 13 August.
Other millers, including ADM, Heygates of Northamptonshire, Carrs of Carlisle and Wright’s Flour Mill of Enfield are planning to follow suit with "substantial" increases to be announced within the next four weeks.
The increases are steeper than experts within the industry had feared. This week, senior industry sources were predicting that the cost of a loaf in the shops would rise by between 6p and 10p in the first week of September this year (2007).
Rank Hovis blamed "unpre- cedented rises" in raw material costs for its decision. Jon Tanner, sales and marketing director, told British Baker: "World wheat production has lagged behind demand for five out of the past six years and we’re now seeing the lowest stocks-to-usage ratio for over 30 years."
He added that spiralling demand for corn over wheat, driven by the rapid growth in the US bioethanol fuel market plus "extreme weather patterns", had contributed to bread-making wheat values being pushed £57 per tonne higher than a year ago.
And Tanner warned that better harvesting weather in the next six weeks was vital "if we are not to see wheat prices escalate further".
He commented: "In 13 years of being involved with commodity markets, I have never experienced such dramatic rises as we have seen with wheat, and other soft commodities, over the past four months. We can no longer absorb these on-costs."
Paul Heygate, joint MD of Heygates told British Baker that the company would be announcing flour price rises to its customers of £69.37 on all bread flours per tonne (£1.11 per 16kg) and £54.36 (£0.87 per 16kg) on all soft flours.
Heygate said: "We cannot continue to absorb the increased price of wheat and other costs involved in manufacturing without passing them on to our customers."
ADM Milling said: "We are evaluating our position and there will be a significant price increase next month. We will inform customers shortly."
Duncan Monroe, MD of Carrs, said: "I am not surprised by the scale and timings of the increase announced by Rank Hovis and others. It reflects the horrendous increase in wheat costs since last autumn. The situation is now critical; a large price rise is overdue. We will be notifying customers of the details in the next few days."
David Wright, MD of Wright’s, said the company was planning substantial increases. "The situation is very serious. Price rises are inevitable in the next few weeks."