Lancaster Farming. Saturday. August 24. 1974
50
(Continued from Rate 49|
counted for:
Farmer. He got on the average
about 5y 2 -cents from a 27V2-cent
pound loaf last year. For the pre
vious 6 years, he received from 3.3
cents to 3.8 cents. Still, farmers got
a smaller share of the price of a loaf
of bread than in the 1947-49 pe
riod—2o percent compared with 25
percent.
Millar, The miller’s share has
bounced around over the past
quarter of a century from 0.5 cent
as recently as 1970 to its high of 1
cent as recently as last year.
Over the years, the miller has not
played as big a role in price in
creases as the baker or the retailer.
In fact, his 3Vi-percent share of the
price of a pound loaf of bread last
year was 1 percentage point less
than it was in 1947-49.
"Other." ERS lumps the cost of
several minor nonfarm ingredients
and charges for relatively minor
functions under “other spreads.”
These charges have fluctuated over
the years, but reached a high last
year of 1.7 cents. They represent the
difference between the cost to the
baker for all ingredients and what
the miller and farmer get.
Baker. The baking industry last
year got a little better than half the
price of a loaf of bread —14 cents.
Back in 1947-49, bakers were receiv
ing a little less than half the total.
About half of the baker margin
Kmco-
' PAGE 41
MEMO
HAY, STRAW
and EAR CORN
SALE
EVERY MONDAY
AT 11 A.M.
New Holland Sales
Stables, Inc.
Phone 717-354-4341
Lloyd H. Kreider, Auct.
the
DOTZ
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>r *
See your PATZ Dealer today
CALL 717 272 0871
MARVIN J.
HORST
Dairy Equipment and
Amana Appliances
E.D. No. 1 (Iona)
Lebanon, Pa.
Located on Route 897 between
Schaefferstown and Lebanon,
over 30 years in business at
same place
riK‘lVk-0 of Bread
goes for wages and salaries, includ
ing fringe benefits.
Over the years, output per man
hour in bakeries has not kept up
with wage increases, resulting in
higher labor costs per loaf. Hourly
earnings for production workers in
bakeries in 1972 were about $3.70, or
about triple the $1.15 average in
1947-49.
In general, the costs of baking
and selling bread are trending up.
With costs increasing, the baking in
dustry has increased mechanization
to raise output per hour of produc
tion labor used. For example, bulk
methods of handling flour have
largely replaced bag handling meth
ods. Bread can now be delivered in
bulk by train or truck and moved by
air pressure through tubes into stor
age bins where, In many instances, it
is moved into an automated bread
production line.
Profits after taxes per dollar of
sales have trended down slightly
over the years, according to a large
sample of bakery firms. In 1955,
they were nearly 3 percent and have
gradually declined to 1.3 percent in
1973.
However, profits after taxes as a
percent of stockholders’ equity have
trended up in the industry much of
the time since 1961. For example,
returns to equity were at the rate of
8.4 percent in 1961 and rose to 12
percent in 1967. But the rate of re-
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New concept in
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C. E. WILEY &
turn dropped sharply in the first
half of 1973 to an unusually low 6.5
percent.
Retailor. Over the past 25 years,
the retailer has taken a slightly
larger share of the price of bread.
Last year, he received 5.4 cents,
more than double the 2.2 cents he
averaged in 1947-49. His share of
the total rose to 20 percent.
Indications are that the retailer's
share is smaller for bread sold un
der a store’s own label than for
wholesale bakery brands. This would
be attributable to lower prices, the
larger volume sold by supermarkets,
and the streamlined distribution
system of bakeries serving them.
Viewpoints
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Not Out of Line
Sharp though it seems, the
jump in bread prices in recent
years has been no greater than
the increase in consumer prices of
all foods.
During the 32 months of price
controls—from August 18, 1971,
to April 30, 1974—the average
price of a 1-pound loaf of white
pan bread rose 37 percent, where
as consumer prices of all foods
as measured by the market basket
index went up 38 percent.
The farm value for ingredients
in this loaf of bread increased
123 percent. The miller’s spread,
difference between what he paid
for the wheat and the price he
got for the flour, advanced 129
percent; the baker-wholesaler
spread by 18 percent; and retailer
spread by about 13 percent.
Much of the bulge in the value
of farm ingredients (mainly
wheat) was due to higher farm
prices and to the pricing flexi
bility of millers operating under
the “volatile price” ruling. In ef
fect, this special rul.'na permitted
millers to charge whatever the
market would bear, putting them
in a position to pay wheat farm
ers competitive prices and to pass
on the increase and then some.
Probably the hardest hit by
price controls were the bakers,
who were caught between the
highly competitive pricing condi
tions in their own industry and
the unique pricing provisions ac
corded the flour millers.
[Based on material by Charles
O’Dell, Commodity Economics Di
vision, Wheat Situation, WS-228,
May 1974.]
#
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