Wheat Decline Doesn't Slice Bread Prices 11/20/76
WHEAT DECLINE DOESN'T SLICE BREAD PRICES By GEORGE ANTHAN Of TIM MMMWl WlMMMK BUTMU WASHINGTON, D.C. - Now that the price of wheat has plummeted to its lowest price in years, and now that U.S. grain supplies are at the highest level in more than a decade, you can expect to pay a lot less for bread at the supermarket, supermarket, right? Wrong*. The U.S. Department of Agriculture (USDA) reports that bread prices in the July-September period actually were slightly higher than a year earlier. The USDA'safoTa one-pound loaf of white bread sold in September for an average oT 35.4 cents, compared to 35 cents in September, 1975. At the same time, the value of the wheat in a one-pound loaf declined from 5 cents in 1975 to 2.9 cents in September of this year. The value of all farm ingredients in a loaf of bread went down from 7.1 cents to 4.6 cents during the period. This means the so-called farm retail spread — the difference between what the farmer gets for the raw commodities commodities that go to make up a product and the final sale price of that product — widened during the year. The USDA says the retailer isn't receiving any major increases. In fact, the retailers' share of the pride of a loaf of bread declined, from 4 cents in September, 1975 to 3.5 cents this year. Also, the USDA said, "the flour milling spread, while increasing recently, still is below the historical highs." According to USDA statistics, the flour millers' share of the price of a loaf of bread was 1 cent this September, compared to eight-tenths of a cent a year earlier. The major increases have come, according to the USDA, in the share retained by the baker-wholesaler of bread. The average share of this segment of the industry increased from 20^7 centsriff'September;' 1975 to 24 cents this year. The USDA states in a report, "in the first quarter of 1972, the baking wholesaling spread was 14.2 cents, 58 per cent of the retail price; by the third quarter of 1976, it had reached 23 cents, or 66 per cent." The USDA report continues, "while spreads do not necessarily indicate profit levels, many baking firms are showing record earnings." Nabisco, Inc., reported net income during the first nine months of 1976 totaling $54.8 million, compared to $38.9 million for the same period last year. Cambell-Taggart, Inc., another large baking firm, reported a 14 per cent increase in earnings during the first three quarters of 1976. The Baked Foods Division of Flour Industries had a 17 per cent increase in earnings in the fiscal year which ended July 3. Early in 1974, when wheat was selling for about |S a bushel, the American Bakers Association warned that bread would reach (1 a loaf if the price of grain continued to increase. A one-pound loaf of bread was selling for about 32.5 cents at that time. Wheat prices received by fanners have since dropped to about $2.50 a bushel.