02/18/08 USDA says bread prices to lead inflation

Farm and Ranch February 18, 2008 The U.S. supply of wheat by this spring could be the lowest in sixty years. That has sent wheat prices paid to farmers skyrocketing to all-time highs. Leibtag: "Of course the record wheat prices we have had for a few months already has started to push breads and other bakery products up in price." That's Ephriam Leibtag, USDA economist who says wheat is selling for double, triple, in some cases four times what it was bringing just a few months ago. But Ephriam says there should not be that kind of increase in the price of bread at the grocery store. Leibtag: "On average it is only about 5% of the cost of a loaf of bread. So for every dollar you spend on bread only about five cents is the actual wheat. Even if prices double it is still a small share of the overall price but it will have an impact. It has gone up so much higher the last three to six months." In fact bread prices were up 4 ½ percent last year. Leibtag says bread will lead all food categories in price hikes this year, possibly going up as much as 6 ½ percent. The American Bakers Association is concerned about high wheat and bread prices. In a news release earlier this month the association called for a curtailment of wheat exports but Senior Vice President Lee Sanders says during a visit to Washington D.C. next month bakers will only be asking that the government monitor wheat supplies closely. They also want Conservation Reserve Program land released for production. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.