Price increases and supply problems for wheat products | Image Header

Price increases and supply problems for wheat products

Industries that process wheat – such as pasta manufacturers and the confectionery industry – are currently facing several problems. Due to poor harvests, prices have risen by 50%. In addition, there are delivery problems that delay the processing of the already scarce commodity.

Poor harvest leads to wheat shortage

Due to extreme weather events in some growing countries, such as this year’s drought in North America, there is currently too little durum wheat available on the market. Both mill operators and wheat processing companies complain about this. The grain is used as a base for bulgur, couscous and pasta, for example, and is difficult to replace with alternatives. Guido Jeremias from the board of the grain, mill and starch industry (VGMS) says that it could well be that the pasta shelves are temporarily not as well stocked as usual.

The confectionery industry is also dependent on wheat. Around 450,000 tonnes of wheat flour are processed by companies in the sector in Germany every year. According to a press release from the BDSI (Federal Association of the German Confectionery Industry), the enormous increase in the price of wheat and the equally sharp rise in the cost of electricity, logistics and packaging materials are having a major impact on manufacturers of sweets and snacks. However, the ever-increasing demand from Asia is encouraging. According to Dr. Carsten Bernroth, Managing Director of the BDSI, confectionery manufacturers are also positive about the prospects for business in the USA.

Confectionery industry affected by rising raw material prices and costs

In addition to the price of wheat, the cost of milk powder, sugar, hazelnuts and soya has also risen significantly. This is due on the one hand to lower crop yields and fewer imports from third countries, and on the other hand to higher demand in Asia.

Like other industries, the confectionery industry is also struggling with higher spending on packaging and energy. The price of electricity for industrial customers has almost doubled within a year. According to the BDSI, the wholesale price has not been this high in twelve years. In turn, the increase in the CO2 price also plays a role in the electricity price increase.

The tense situation is exacerbated by the Corona pandemic and the logistical problems associated with it. A shortage of freight capacity and rising global demand are leading to bottlenecks and price increases in the logistics sector.

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