The past few years have been challenging for both farmers and bakers. In 2016, U.S. consumption of wheat flour plummeted to its lowest point in nearly three decades. Furthermore, American farmers planted the smallest winter wheat crop in over a century. As is typical with supply and demand dynamics, farmers who successfully harvested high-protein winter wheat are now charging a premium price. This increased cost travels down the production chain but ultimately falls on the bakers, who have largely been unable to raise prices for their rolls and loaves due to declining consumer demand. However, if another season of high-protein wheat shortages occurs, we may see an increase in the price of an average loaf of bread.
To manage costs, bread manufacturers have adapted by reformulating their recipes to utilize cheaper low-protein wheat. By incorporating calcium citrate granules and other additives, many bakers can maintain the light texture that consumers expect. However, they still bear the burden of research and development expenses, as well as the rising costs of these additives, including gluten, which has seen a 20% price increase due to heightened demand.
High-protein winter wheat makes up approximately 40% of the U.S. wheat crop, valued at $10 billion. Major wholesale bakers like Grupo Bimbo, Flowers Foods Inc., and Campbell Soup Co.’s Pepperidge Farms are already experiencing diminished profits. Their profit margins will continue to be squeezed until a substantial crop of high-protein winter wheat becomes available again. If bread sales decline due to the shortage, it may benefit manufacturers who produce bakery items without wheat flour, such as Udi’s and Food for Life. Additionally, there could be a surge in demand for alternative flours, such as those made from brown rice and millet, as bakers seek to diversify their offerings in light of the current challenges.