Will the Price of Bread Rise in the Czech Republic?

Czech bakers and experts have reassured consumers that bread and baked goods will not rise despite the recent increase in wheat prices on the global commodity market. The cost of wheat rose sharply last week due to Russia’s termination of an agreement and threats to block Ukrainian ships carrying grain. Wheat prices on the global market have grown the most since 2012. However, experts in the Czech Republic have stated that the current rise in wheat prices will not lead to an increase in the price of bread and baked goods in the country.

Bohumil Hlavatý, the executive director of the Association of Bakers and Confectioners, told Právo that “at the moment, contracts are averaging three months, so there is a certain amount of room for calming wheat prices.” Agrarian analyst Petr Havel agrees that a long-term increase in wheat prices would affect the price of bread and baked goods in the Czech Republic, but it would not be as noticeable as last year.

Havel said that “wheat prices were generally meager, so before the increase is reflected, it will be diluted. The stock exchange prices will rise for a while, but I don’t think it will be too significant.”

The price of Czech domestic wheat has also fallen due to the redirection of Ukrainian production through the Czech Republic and other countries in the wider region, with farmers selling it for about 45% cheaper than last year in July. Despite this, they still struggle with storage problems, as silos are full.

According to Zemědělský svaz spokesperson Vladimír Pícha, “Farmers who invested in storage capacity even at lower profits in the past are currently selling only the necessary amount and leaving the rest on the shelves. If the estimates predicting a harvest of around seven million tons are met, there will be nowhere to store about a million tons of grain.”

The limited ability to transport wheat by sea from Ukraine to traditional customers in North Africa or the Middle East is likely to increase the import of Ukrainian wheat into Europe, including the Czech Republic, even though Bulgaria, Romania, and Poland have banned wheat imports from Ukraine.

However, Hlavatý admitted that Czech bakers need low wheat prices to compensate for rapidly rising labor costs and expected increases in energy prices. Czech bakers and confectioners have the lowest labor costs of all food industries, and if they want to maintain the expertise of their employees, they must pay them well. This means the pressure on labor costs in the bakery industry is higher than in other food industries.

Havel believes that the high competition in the Czech bakery market will slow down the bread rise and baked goods prices. “We have many bakeries, and competition is very high. Thanks to this, no one can raise the price too much. There are enough industrial bakeries, and there may even be too many small ones,” he said.

Consumers in the Czech Republic can breathe a sigh of relief knowing that the price of bread and baked goods is not expected to rise shortly, despite the recent surge in wheat prices on the global market.