Tuesday 27 September 2022

9% rise in cost of flour puts pressure on consumer prices for bread, cookies and pasta

Molinos de Costa Rica attributes measure to 30% increase in world wheat prices

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27 September 2022 - At The Banks - BCCR

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QCOSTARICA – A 9% increase in the cost of wheat flour, put into effect this Thursday, July 1, by the Molinos de Costa Rica, puts pressure on the consumer prices of bread, cookies and pasta.

A bag of 50 kilos of flour went from ¢23,000 to ¢25,000, as of the first day of July.

According to the report by the company, a bag of 50 kilos of flour went from ¢23,000 to ¢25,000, as of the first day of July.

It is estimated that at least 50% of the total cost of making bread comes from the raw material, that is, flour.

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The increase in the raw material (estimated that at least 50% of the total cost of making bread) made from wheat, is due to a strong rise in the international prices of the grain, explained the general manager of Molinos de Costa Rica, Luis Ruenes.

Ruenes added that between April of this year and to date, the prices of wheat increased by an average of 30% and that the weather and demand conditions suggest a continuity of the price escalation.

The drought in Canada and the United States had a direct impact on the plantations of this grain in those two countries, which leads to an estimate of a drop in production.

Additionally, the harvest in Brazil was also affected by the weather, which is why large buyers from that South American country, particularly China, had to turn to suppliers from the northern hemisphere, explained Ruenes.

In Argentina, another major global supplier of wheat, a loss of around 10% of the expected harvest was estimated in the 2020-2021 cycle, also due to the impact of drought.

Other South American suppliers, including Paraguay, also reported problems caused by water shortages.

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Meanwhile, international trade reports report an increase in grain purchases in general by China, a country whose intention is to redo its agricultural inventory, said the manager of Molinos de Costa Rica.

The combination of factors, he commented, leads to estimates that world wheat values ​​will continue to rise in the coming months.

He added that this month a ship arrived with wheat imported by that company (enough to supply the market in two or three months), with a price 30% higher than the one brought in April.

 

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