bake - July/August 2021 - 6

management
InflationHOTSPOTS
The baking industry is experiencing dramatic price increases on
a wide range of commodities, including wheat, corn, and soybean
oil - and baking executives are trying to get a handle on
where the market is headed.
" There are a lot of inflation hot spots right now, " observes Lee
Sanders, American Bakers Association's senior vice president,
government relations and public affairs, who moderated the association's
Bake to the Future podcast on this topic. " Grain and
oil seed prices are up sharply over the past year with corn and
wheat futures rising to all-time records. "
Podcast speakers discussed the many catalysts of price acceleration
and the outlook. They also offered guidance to the
baking industry on how to address the challenges. The speakers
included Hayden Wands, vice president of global procurement,
commodities, Grupo Bimbo; Bill Lapp, founder and president,
Advanced Economic Solutions; and Rasma Zvaners, ABA's vice
president of regulatory and technical services.
Complicating the pricing challenges is a factor close to home:
supply chain hurdles emerging as the US economy reopens after
pandemic lockdowns.
" As things open up there is more demand for trucks, carriers,
and ingredients, " explains Wands of Grupo Bimbo, who is
the chair of ABA's Commodity and Agricultural Professionals
Group. " We haven't been faced with this situation in the past
where the floodgates open all at once. "
While it's possible that the supply situation for commodities
such as wheat and corn will improve and pricing will ease during
the balance of the year, a different scenario is becoming increasingly
likely. China may continue its robust purchasing and
crop yields might be further stressed, with corresponding price
impacts, says Lapp.
06 < JUL-AUG 2021 | bakemag.com
Increases in soy oil prices - with futures doubling over the
past year - have been sparked by factors ranging from surging
global demand to tightening stocks.
Food deserts
Of note, food deserts remain a critical issue within the food retailing
landscape.
Within the United States, in 2015, there were 23 counties without
any food retailers; all were rural nonmetro (nonmetro counties
with an urban population less than 2,500 people).
There were 44 counties without any grocery stores, 40 were
rural nonmetro and four were urban nonmetro (nonmetro counties
with an urban population of 2,500 people or more).
There were 41 nonmetro counties with one food retailer and
115 with one grocery store. However, the median nonmetro county
had 16 food retailers and seven grocery stores.
Supply challenges
ABA is working with the Biden Administration and members of
Congress to help address pricing and supply challenges. The association
is communicating the industry's needs to federal agencies
- such as by providing input to USDA as it explores supply
chain security issues.
ABA and the baking community also have an opportunity to
provide comments to the Environmental Protection Agency,
which is responsible for the Renewable Fuel Program that focuses
on annual quotas of biodiesel and other renewable fuels.
EPA's decisions need to take into account factors such as
price and supply of agricultural commodities and food prices.
Lapp urged bakers to take strategic approaches to pricing
and supply challenges.
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bake - July/August 2021

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