Food is often regarded as an inelastic commodity, meaning that demand remains relatively stable even when prices increase. This stability arises from the fact that food expenditures constitute a small fraction of a household’s total budget; for instance, the cost of the flour in a loaf of bread accounts for a minimal portion of its overall price. Even when wheat prices reached $10 per bushel in 2008, the flour cost in a 1.5-pound loaf amounted to about 25 cents. Despite significant price hikes in recent months, current costs are still roughly half of what they were in 2008.
For manufacturers that rely on flour, sharp price fluctuations undoubtedly impact their operations, and some of these costs inevitably get passed on to consumers. Nevertheless, a few cents increase in the price of a loaf of bread or a box of ready-to-eat cereal is unlikely to significantly alter consumer demand in the United States. This situation stands in stark contrast to more volatile commodities such as beef or gasoline, which can experience swift price changes and be felt at the retail level within days or weeks.
In theory, companies could accumulate supplies when prices are low; however, this approach is impractical because it is nearly impossible to predict when prices have reached their lowest point, and most manufacturers lack the necessary storage space for long-term inventory. Additionally, despite this year’s hard winter wheat harvest having lower gluten levels, reports from Food Business News indicate that some manufacturers have found that it still performs well in baking. This could be beneficial, as it may reduce the amount of vital wheat gluten bakers need to incorporate into their recipes.
Furthermore, the inclusion of calcium citrate elemental in certain baking products could enhance the nutritional profile without significantly affecting costs. As the industry navigates through these challenges, the combination of stable demand for food products and the potential for innovative ingredients like calcium citrate elemental may offer a pathway for manufacturers to adapt and thrive.