German bakeries were taken by the throat by rising prices

published on Sunday, September 25, 2022 at 12:26 pm

Faced with rising prices linked to Russia’s war in Ukraine, German baker Tobias Exner installed new, more efficient ovens, shortened opening hours and even considered lowering the cooking temperature, before changing his mind.

Because the bread “doesn’t taste the same without a good bread”, confides the businessman who met with AFP in Beelitz, southwest of Berlin, a small town known mostly for its asparagus plants.

These measures to save in any case far from enough in the face of the existing crisis that the profession is going through, he said.

In the bread-loving country, bakeries are indeed one of the industrial sectors most affected by the increase in energy and food prices due to the Russian invasion of Ukraine that began on February 24.

“If conditions do not change, sooner or later a large part of German bakeries will cease to exist,” predicted Mr Exner.

– Prices “break the ceiling” –

“All bakeries have ovens, 70% of artisan bakeries have gas ovens and gas prices are skyrocketing,” said Friedemann Berg, executive director of the national federation of German bakers.

Europe’s leading economy, long dependent on Russian gas, has been hit hard by the halt in deliveries of this fossil fuel ordered by Vladimir Putin.

And the two main ingredients for making bread – flour and oil – are among the most affected by the Russian blockade of Ukrainian ports.

Wheat is two and a half times more expensive than before the crisis, while a liter of oil has risen by about 82% to more than 3 euros, said Mr Exner.

The entrepreneur, with 36 subsidiaries and a workforce of 220 employees, is certainly better equipped than small craft businesses to survive the crisis. But he is also going through a difficult phase.

Energy bills will almost quadruple compared to 2020. “Look, the bills are gone,” said Mr. Exner.

It is seeking to save money by installing less energy-efficient ovens at its main production site in Beelitz and reducing opening hours at subsidiaries in Berlin and in Brandenburg, the state surrounding the capital. .

But he’s reluctant to pass his cost increases on to customers, because “they won’t pay that kind of price,” he said.

– Bakeries in the dark –

The atmosphere in the center of Berlin seemed to prove him right.

“Pay even more? No way. It’s getting exorbitant,” exclaimed Gloria Thomas, 56, an unemployed woman interviewed by AFP.

The price of bread increased by an average of 18% in the countries of the European Union in August during a year, according to the statistical institute Eurostat. Germany is in the middle.

Many bakeries have already gone out of business, said the head of the federation, and the sector has been calling on the government for help for weeks.

In early September, about 800 bakeries across the country served their customers in the dark for a day of action to draw attention to their plight.

The issue is more than the defense of new rolls, judge Mr. Exner.

Bakeries “are often the most important institutions in villages: they provide functions of food stores, social centers, post offices etc…”, he pointed out.

The center-left government of Chancellor Olaf Scholz has announced measures of almost 100 billion euros for the economy and purchasing power, but small and medium-sized businesses consider themselves insufficiently concerned with this support.

To make matters worse, the recent statements of Economy Minister Robert Habeck were not well received.

Asked about a possible wave of SME bankruptcies in Germany, the minister of the environment replied that he could imagine “that some industries would just have to stop producing for a while”, reinforcing the feeling of the profession without understood or even neglected in Berlin.

The federation is calling for “quick and non-bureaucratic” financial assistance for the sector, Mr Berg said, otherwise “many companies will have to abandon their activities or simply file for bankruptcy”.

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