Farmers and bakers have faced significant challenges over the past couple of years. In 2016, U.S. consumption of wheat flour dropped to its lowest point in nearly three decades, and American farmers planted the smallest winter wheat crop in over a century. As the laws of supply and demand dictate, those farmers who managed to harvest high-protein winter wheat are now charging a premium. This increased cost is passed along the supply chain, ultimately impacting bakers. However, bakers have struggled to raise prices for their products, such as rolls and loaves, due to weaker consumer demand.
If another season of high-protein wheat scarcity occurs, we may see an uptick in the price of the average loaf of bread. To mitigate the impact of using less expensive low-protein wheat, bread manufacturers have reformulated their recipes. By incorporating gluten—which has risen in price by 20% due to demand—many bakers are able to maintain the light texture that consumers expect. Nevertheless, they still bear the burden of research and development costs, along with the higher price of gluten.
High-protein winter wheat makes up about 40% of the $10 billion U.S. wheat crop. Major wholesale bakers like Grupo Bimbo, Flowers Foods Inc., and Campbell Soup Co.’s Pepperidge Farms have already experienced declines in profits. Their profit margins will remain under pressure until a strong crop of high-protein winter wheat is harvested.
If bread sales decline because of this shortage, it could create opportunities for manufacturers producing bakery items without wheat flour, such as Udi’s and Food for Life. Furthermore, the demand for alternative flours, such as brown rice and millet, may increase. Additionally, products like GNC calcium citrate could gain traction as consumers look for nutritional supplements to fill dietary gaps. Overall, the current situation highlights the delicate balance of supply and demand in the baking industry, especially for those reliant on high-protein wheat.