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Rising wheat prices
Durango finds it takes more dough to buy a loaf of bread

March 19, 2008
| Herald Staff Writer

When Cory Kitch realized last month that skyrocketing wheat prices weren't about to come back down to Earth in the near future, he made a bold move to stay one step ahead of the market: The owner of Home Slice Pizza bought 5,000 pounds of flour.

Cory Kitch, owner of Home Slice Pizza, tosses dough Tuesday while preparing a pizza. The rising price of wheat has forced Kitch to stockpile wheat in an effort to minimize costs. Still, the restaurant’s price for a large pie has increased from $13.50 to $14.25 in recent weeks. Cory Kitch, owner of Home Slice Pizza, stands next to the unusually large number of bags of flour he purchased in an effort to combat steadily rising wheat prices.

"It's my tower of gluten power," Kitch said of his unconventional investment, which consists of 100 50-pound bags of flour on two shipping pallets. He said he made the move because his flour costs have jumped from just more than $8 per bag a few months ago to about $30 per bag today. His bulk purchase netted him a price somewhere in between.

"The price isn't dropping - I hear they're expecting it to continue through the fall," he said.

At a rate of about 14 bags a week, Kitch's cache will last about a month and a half. After that, he'll find himself in the same situation as every other Durango-area food purveyor large or small.

Nationally, wheat prices have more than tripled in the last 10 months and those costs are now being felt by Southwest Colorado wholesalers and retailers.

While 5,000 pounds of flour may seem impressive, it pales in comparison to the quantities at Bread. Co-owner Jeffe Morehart said her bakery goes through between 3,000 and 4,000 pounds a week from mills in Platteville and Monte Vista.

She said she's aware of the factors influencing the price spike, which includes the use of crops for energy rather than agricultural purposes, but she has no intention of shopping the globe for a cheaper price.

"My ultimate hope is that the general public will be more understanding of the general cost of production. I'd rather we didn't start buying wheat from China - I'd rather my wheat not travel that far," she said.

Morehart said even though she buys in volume, her prices have more than doubled as well. Retail prices have hardly kept pace, although prices in the store are up 10 percent to 15 percent on average. But she said the higher price tags haven't translated to a drop in business.

"People have been supportive," she said.

"I think with the general increase in food prices over the last year - I don't know if people are expecting it or are just sympathetic - but I haven't heard anything, and I would expect to hear from them if they were upset. Because it's happening to everyone, it kind of softens the blow."

Few if any are immune to the price spike, which has begun to affect other commodities as well.

"My raw costs have gone up everywhere, and it's costing more from my suppliers because their costs are up," said Denny Rahilly, the owner of Mill Street Brews in Bayfield. Rahilly buys the bagels for his coffee shop from Durango Bagel, whose owners informed him that costs would go up in February. He said prices for other items, including dairy, beer and coffee are also on the rise.

"But so far I haven't passed it on to my customers," Rahilly said. He said price increases will likely come the next time he prints new menus.

"Even my coffee prices have gone up for the first time in three years," he said.

Most businesses, regardless of size, have already begun to catch up to the rise in wheat prices. A loaf of bread baked in City Market's bakery that cost 99 cents a month ago now costs $1.59. And at Durango Dough Works, which does both retail and wholesale business, co-owner Dylan Norton said things probably won't change any time soon.

"I've done some increases for wholesale, and we have a sign that says bagels are 10 percent more," he said. But he said that retailers and even wholesalers can't keep pace with their suppliers.

"They pass them on immediately," Norton said. He said his suppliers have consistently raised his cost for organic flour from $18 a bag two years ago to its current price of $45 a bag.

Norton said that labor is the largest component of retail pricing, but even though costs like flour make up a small percentage of the retail price, it can't be ignored forever.

"The consumer hasn't felt the brunt of it yet because these things tend to get absorbed - we can't change our prices every day," Norton said.

"Once in a while we get someone who complains about the price of a bagel, but at least we haven't tripled it," he said.

Kitch's stockpiling efforts have provided some stability for his bookkeeping in the coming months, but the cost of a Home Slice pizza is not immune to the whims of the market, either - the price of a large pie has gone from $13.50 to $14.25 in recent weeks.

But just as soaring gas prices don't appear to be lessening traffic on area roads, Kitch says the rising costs haven't kept people from coming through the door.

"People see it happening at the grocery store, too," he said. "I don't think it's like a shock to everybody that food is getting more expensive."

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