War in Ukraine has already hit the price of bread

The war in Europe has already caused the rise in the price of bread in Peru. Since last weekend, the price of four for a S/ 1.00 has been standardized in various bakeries. Until a few days ago, an important group of locals still offered five loaves for one sol. The key is the wheatessential input to make bread.

Russia, the first exporter of the cereal in the world, and Ukraine They represent 25% of the global grain market.

Currently, the price of wheat has climbed to its highest level in more than nine years and is trading at more than $1,000 a bushel; and our country imports it from Canada, the United States, Argentina and Russia, according to figures from the Ministry of Agrarian Development and Irrigation (Midagri).

Angie Higuchi, a professor at the Universidad del Pacífico, recalled that specifically in the case of French bread, a food present on the table of all Peruvians, its price rose by 3.5% in metropolitan Lima last year, paying a price that It ranged between S/ 0.30 and S/ 0.40. This increase in prices was explained by the international rise in wheat, the rise in the dollar, and an increase in energy rates, among other factors.

However, at present, “the exit of the Russian wheat market triggers a lower supply of grain and its subsequent rise in cost,” Higuchi said.

Jorge Luis Ojeda, professor of Finance at the UPC, agrees on this, since he specifies that the rise in wheat has been 60% and that it will be permanent, even if the armed conflict dissipates, since shipments from both nations would take time to recover.

Despite this situation, Alejandro Daly, director of the Food Committees of the National Society of Industries (SNI), assured that the supply of wheat flour is guaranteed in Peru. “The millers have bought their stocks long before so that the market is supplied,” he pointed out.

Measures to counter the crisis

In 2021, the price of bread rose by 10.13%, and between January and February it already accumulates a 0.24% increase, according to the inflation report from the National Institute of Statistics and Informatics (INEI).

The Peruvian Association of Bakery and Pastry Entrepreneurs (Aspan) told La República that average production costs have risen 20% after the start of the conflict, which were added to 70% of 2021; Despite this, the guild recommended its members to “increase the quality of the bread and not lower its weight.”

Reducing grains could be a “prudent” alternative so that merchants do not lower their sales, Ojeda said.

“When the price of bread rises, there is an effect on human psychology, consumers think that they are receiving less for a larger quantity; instead if they continue to consume the same theoretical amount, there will be less rejection, ”he explained.

With regard to raising, lowering or maintaining the price, Pío Pantoja, president of Aspan, commented that it is the bakeries who must restructure it.

“The public is aware that this is a global situation and it no longer depends on the bakers, but they do pay for good bread. Then, the bakers will see how they manage the price”, Pantoja anticipated.

Another idea has been to sell the bread by the kilo. The Aspan leader was in favor of this proposal because “the public will value the quality of the bread and will pay for what it really contains.” Only 3% of bakeries apply the modality, Pantoja said.

Karina Yachi, a researcher at La Molina National Agrarian University, stated that the bakery industry “must look at new edges so as not to depend on the prices of imported inputs subject to innovation”, in order to give the consumer a more nutritious proposal such as breads with quinoa or potato.

Our daily bread

Pío Pantoja revealed that the per capita consumption of bread amounts to 42 kilos and will continue to rise, since this food is the cheapest and most demanded of the basic family basket.

The cost of a loaf will be determined by factors such as the price of electricity and supplies used, the situation of the establishment (formal and informal), health and the socioeconomic stratum in which the business is located.

The 50-kilo sack of wheat flour went from costing S/ 130 to S/ 180 in just two weeks, revealed bakers consulted for this note.

Chicken and egg prices rise

While the conflict between Russia and Ukraine continues, the impact of the increase in the price of corn in the products of the basic basket is being felt, which above all affects the poultry industry.

In the markets of Ventanilla, Breña and Villa El Salvador, the price of a kilo of whole chicken rose to S/ 9.50 and a kilo in parts reaches S/ 10.00. In the wholesale markets, the kilo of chicken rose to S/ 6.17 (before S/ 5.00), according to information from Midagri.

The kilo of egg has been rising in the last two weeks and has come to cost between S/ 7.00 and S/ 7.50.