Ukraine War Sparks Wheat Price Hikes, Threatening Bread and Pastry Costs in Israel
Translated & summarized from Calcalist by baba
Major Israeli flour mills are increasing prices by up to 14% starting in November due to the war in Ukraine driving up global wheat costs. This could lead to higher prices for bread, pastries, and other food products, as well as potentially for chicken, eggs, and dairy if animal feed costs rise. Bakeries are also seeking to raise regulated bread prices, which haven't been updated in four years, but face political uncertainty.
The story in 5 lines · by baba
- Flour prices in Israel are set to rise by up to 14% in November due to the Ukraine war.
- The Ukraine conflict has closed Black Sea ports, forcing Israeli importers to buy more expensive European wheat.
- Rising flour costs may lead to increased prices for bread, pastries, and other flour-based foods.
- Regulated bread prices in Israel have not been updated in four years, creating challenges for bakeries.
- Potential increases in animal feed costs could also raise prices for chicken, eggs, and dairy products.
The escalating conflict in Ukraine is driving up wheat import costs for Israel, with major flour mills announcing price increases set to take effect in early November. These hikes currently apply to flour supplied to food companies and bakeries, and it remains uncertain if they will extend to retail prices for consumers. The rising cost of flour could subsequently lead to increased prices for bread, pastries, and other flour-based food products. If grain prices for animal feed also rise, consumers could face higher costs for chicken, eggs, and dairy products.
One flour supplier, Bar Lev, informed its clients of an 11% price increase, citing sharp global wheat price hikes due to the closure of Black Sea ports amid the Russia-Ukraine war. The company explained that it is forced to source wheat from Western Europe at significantly higher prices, a 35% to 40% increase compared to a few months ago, leading to substantial rises in raw material, transportation, and labor costs.
Another flour group, Miftah HaGalil, notified its customers of a 14% price increase, effective the same date. Shtiebel, another flour company, is also expected to issue similar notifications. The extent to which these increases will be passed on to consumers is unclear and may be influenced by the upcoming Israeli elections. Political parties promising to lower food prices might deter food companies from implementing further price hikes, especially after multiple price increases during the outgoing government's term.
Bakeries face a particular challenge with regulated bread prices, which have not been updated in four years. Although the price of regulated white bread rose by 36% in July 2022, and bakeries increased bread weight while maintaining the price per 100 grams, they are expected to request further price adjustments from the Ministry of Economy's price supervisor. Approval is uncertain due to the sensitive political timing.
Furthermore, the conflict's escalation could impact the prices of animal feed and poultry in Israel, which rely on grain blends. A rise in grain prices, similar to wheat, could eventually lead to increased costs for dairy products, chicken, and eggs.
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