US Bakers in the US Face Problems with Low-Quality Wheat

American bakers face a crisis getting the right kind of bread and bread specialties in the USA, as the wheat crop is below proper quality, according to Reuters.

Gonnella Baking Co – which supplies the buns to Major League Baseball’s Wrigley Field – faced an unusual problem in October, when flour from this year’s U.S. wheat harvest arrived at their factories containing low levels of protein.

That meant bakers couldn’t produce bread with the airy texture customers demand, setting off two weeks of tweaking temperatures and the mixing process, and the eventual purchase of gluten as an additive. By the time this was done, Gonnella had thrown away more than USD20,000 worth of substandard bread and buns, said president Ron Lucchesi.

The problem spans the USD23bn U.S. bread market and highlights a paradox in the global wheat trade. Despite a worldwide grains glut, high-protein hard wheat is scarce after two years of poor U.S. harvests. The shortage hurts bakers and millers who prize high-protein wheat, along with the farmers who grow it.

Wholesale bakers such as Grupo Bimbo, Flowers Foods Inc and Campbell Soup Co’s Pepperidge Farms are feeling the squeeze on margins, said Stephen Nicholson, senior grains and oilseeds analyst with Rabobank, according to the press agency.

All three companies have seen their stock prices fall over the last two years, a period when the benchmark S&P 500 index gained more than 26%.

Millers such as Archer Daniels Midland Co, Ardent Mills, General Mills Inc have been able to pass on much of their higher wheat costs in sales of flour to bakers, he added. But bakers have not been able to pass those costs to grocers, who have been unwilling to pay higher prices because of increased competition and price deflation.

Global wheat inventories have risen to record-high levels due in part to heavy production from Russia. Meanwhile, US per capita consumption of wheat flour in 2016 fell to its lowest level in nearly three decades, and U.S. farmers planted their smallest winter wheat crop in more than a century.