Global wheat pressure: Bread price hike expected

File photo.

The price of bread in New Zealand is set to rise as Russia's invasion of Ukraine puts pressure on global wheat prices.

Ukraine and Russia account for about 30 per cent of global wheat exports and since the conflict began global prices have risen sharply due to supply fears.

Flour Millers Association secretary Andy Worrill says about 70 per cent of the wheat used in flour production in New Zealand was imported, mostly from Australia.

Worrill says while its members did not directly import wheat from Russia and Ukraine, other countries that did are now looking to Australia to bolster their supplies.

"So, inevitably, there's likely to be a price increase to get wheat into New Zealand and we expect that to flow through to pricing at some point for wheat based food products."

Worrill says some members have forward contracts which will help delay price increases "to some extent," but new orders will have to start being placed for future supply reasonably soon.

"The bottom line is that there is uncertainty around just where that wheat price is going to end up, the wheat that comes out of Russia and Ukraine is a significant part of world supply and the disruption to that market will inevitably have an impact on the world price."

Lincoln University agribusiness professor Hamish Gow, who specalises in trade policy and global value chains, says  bread will likely be one of the first food products where consumers noticed a price hike as a result of Russia's invasion of Ukraine.

"[It's] impacting grain prices immeditately... so it'll probably come through and things like bread and oil, vegetable oils first and then it'll start feeding its way into other ones."

Food manufacturers can cover higher input costs for only so long before they have to start passing some of this on to consumers, he says.

Gow says countries which have not placed sanctions on Russia, such as China, are likely to receive grain from Russia at a discounted rate - something which is already being seen on the energy market.

-RNZ/Maja Burry.

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1 Comment

Any excuse...

Posted on 11-03-2022 15:31 | By morepork

... that can be grabbed for raising prices of ANYTHING, will be. When I saw this I realized we don’t import wheat from Ukraine or Russia; it comes from Oz, and they produce VAST amounts of it (6th in the world; over 30,000,000 tons). We use 6,000,000 tons a year. So Oz can easily cover their and our needs. If they divert exports as a result of Ukraine they are simply penalizing a traditional partner. If we have to, we could easily be self-sufficient in grains. If they push us, we may have to.

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