Baking & Snack - December 2008 - 10

EDITORIAL

EDITORIAL STAFF
Executive Editor
Laurie Gorton
lgorton@sosland.com

A Stable Roller Coaster Ride

Editor

heat at $13 per bushel; wheat at $5 per bushel. Cocoa at $3,000 a metric
tonne; cocoa at $2,200 a metric tonne. Butter at $1.22 per lb; butter at
$1.74 per lb. Purchasing agents in the grain-based food industry have seen
each of these prices, all within the past year. Such change inside a single year
is almost without precedent. And don't expect the volatility in commodity markets to
abate - that's what the market experts at Sosland Publishing and elsewhere advise.
As reported on Bakingbusiness.com by Josh Sosland, editor of Milling &
Baking News, the turmoil in ingredient markets will likely continue, subjecting buyers to swings in prices like those experienced during 2008. In this, he summarized the
opinions voiced by grain, commodity and energy specialists who participated in our
company's Purchasing Seminar update Webinar conducted in mid-November. Wheat
is a particular concern. Although 2008 saw a record harvest, a forecast cut in fall 2008
plantings could lead to further reduction in wheat acreage during 2009.
Although bakers and snack food manufacturers, like all food processors, will struggle with highly changeable pricing for basic ingredients for the foreseeable future, the
packaged foods industry remains relatively stable. That bit of good news in today's
parlous economic times comes from Fitch Ratings, a Chicago, IL-based rating agency
that serves the world's credit markets. It attributed its ﬁnding to consumer spending
behavior that now favors eating at home. "Packaged goods are a good value (to consumers) even with recent price increases," the agency asserted. It said that input cost
inﬂation for 2009 is likely to exceed that in 2008, and as the year progresses, packaged
food companies may see some beneﬁt from lower grain-related and energy costs.
Looking ahead at conditions affecting the baking industry but using a different
basis - ﬂour production data - Morton Sosland, editor-in-chief of Milling & Baking
News, came to a conclusion similar to Finch's: The performance of grain-based foods
is strikingly positive. "Flour production in the ﬁrst nine months of 2008, a period
wracked by wild price swings and a deteriorating economy, was practically the same
as in the prior year when conditions were considerably brighter," he stated. (Flour
production mirrors demand from commercial manufacturers of grain-based foods.)
Yet he cautioned that conditions in the overall American economy warrant a conservative approach to capital investment, enough to dampen potential capacity expansion
at the country's mills. And, by extension, at the country's baking plants.
Taken together, these insights justify keeping a tight grip on operating costs as well
as investment plans. Although food tends to be the most recession-proof category of
consumer spending, conditions in the ﬁnancial markets can impact the food processing industries, particularly their receivables and lines of credit.
In other words, the roller coaster ride goes forward, but the baking industry remains
stable. So if 2008 tested your management skills, ingenuity and patience, 2009 promises more of the same. It's
a good thing you're up to the challenge!
(The economic reporting and analysis talents of our
colleagues add immeasurably to the credibility of all
Sosland Publishing Co. magazines and publishing projects. If you don't yet subscribe to Milling & Baking News
and Food Business News, you should. Visit our Web site,
www.bakingbusiness.com, for details.)

Managing Editor

- Laurie Gorton, executive editor
lgorton@sosland.com

BAKING & SNACK / December 2008

Steve Berne
sberne@sosland.com
Holly Bradley
hbradley@sosland.com

Senior Associate Editor

Jennifer Barnett Fox
jfox@sosland.com

Associate Editor

Kimberlie Clyma
kclyma@sosland.com

Senior Editor

Shane Whitaker
swhitaker@sosland.com

Contributing Editors:

Columnists:

Donna Berry
Rebeca López-García
Richard F. Stier
Jim Kline
jkline@theensolgroup.com
Theresa Cogswell
bakercogs@sbcglobal.net
Anne Giesecke, Ph. D.
info@a-dpolicyanalysis.com

DESIGN STAFF
Design Services Manager

Sadowna Conarroe

Designer

Jennifer Cheek

Manager of Advertising Design
Classiﬁed Ad Layout

Becky White

Christina Sullivan

Design Team Assistant

Steve Piatt

PUBLISHING STAFF
Chairman
Charles S. Sosland
Vice-chairman
L. Joshua Sosland
President
Mark Sabo
Publishing Director
G. Michael Gude
Publisher
Paul Lattan
Vice-President,
Chief Financial Ofﬁcer
Melanie Hepperly
Audience Development Director Don Keating
Advertising Manager
Nora Wages
Ad Materials Coordinator
Debbie Maniez
Digital Systems Analyst
Marj Potts
Circulation Manager
Sheryl Morrow
Marketing Communications
Manager / Reprint Manager
Carrie Fluegge
Editorial and Midwest Sales Ofﬁce
4800 Main St., Suite 100, Kansas City, MO 64112
Phone: (816) 756-1000; Fax: (816) 756-0494
E-mail: BakingSnack@sosland.com
Internet: http://www.bakingbusiness.com

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BAKING & SNACK is distributed free-of-charge to
qualiﬁed readers with managerial responsibilities in the
baking and snack food industries. SUBSCRIPTIONS: To
apply, ﬁll in and mail the request form in this issue. For
non-qualiﬁed readers, U.S.subscriptions are accepted at
$36 per year. Other Canadian and foreign subscriptions
(from outside the territory of the U.S.and its possessions)
are accepted at $72 per year. BAKING & SNACK assumes
no responsibility for the validity of claims in items
reported. ©2008 Sosland Publishing Co. , a division of
Sosland Companies, Inc. All rights reserved. Reproduction of the whole or any part of the contents without
written permission is prohibited. Printed in U.S.A.

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Baking & Snack - December 2008

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