An uphill batter for local bakeries

Rising dough: Businesses have had to absorb costs or raise the prices of their baked products due to the increasing costs of ingredients, including flour. — Bloomberg

SO how expensive is it getting to run businesses like bakeries on the heels of affected wheat imports and exports worldwide?

Homebaker@Clover bakery chain chief executive officer Rosli Manaf says the business has recorded a significant increase in ingredients cost following the shortage in and price hike of wheat flour since last year.

Each of the chain’s 16 outlets needs a monthly supply of three tonnes of unbleached wheat flour to bake their popular cinnamon rolls, a mainstay of their business.

Rosli stresses that the use of unbleached wheat flour remains unavoidable as it is the most suitable type of flour for baking.

Today the price of unbleached flour is about RM3.60 per kilo, compared with multi-purpose flour at RM2 per kilo (and that’s an increase in price, by the way).

“Before the shortage [earlier last year], unbleached wheat flour was priced at RM70 per gunny sack, which is about 25kg each. Now, the cheapest you can get is RM98. The most expensive it has reached to date was RM114. It is about a 30% increase. The price is more or less the same across brands.”

The problems stemming from the wheat flour shortage also affect the business’s production model following the inconsistent supply of ingredients to each branch.

“We procure our wheat flour from various suppliers and can no longer depend on a single brand.

“At the same time, we need to consolidate our production process. Otherwise, we will have shortages in separate places and the logistical costs to deliver the ingredients will be high.”

Some businesses have opted to absorb costs while others feel they have to increase prices of products, albeit minimally.

Asmaradana Cakes owner Asmah Shamsuri says the price increase is used to cover the costs of ingredients, including wheat flour.

Asmah shares she has had to tweak her business model to keep her business running as well as her customers returning.

“I cannot increase the prices so much and risk driving my customers to competitors. Other than prices, nowadays I sell more cakes at smaller sizes, about half a kilogramme each.”

She had even mulled over the idea of selling her cakes by slices, which, arguably, would be cheaper for the customers to purchase.

“But my customers do not want to buy slices, they want whole cakes. I have to cater to their preferences as well.

“But Alhamdulillah, we are still able to maintain our business despite the challenges, so far.”

The same goes for many Mamak restaurants trying to soften the blow to their businesses.

Malaysian Indian Muslim Restaurant Owners Association (Presma) president Datuk Jawahar Ali Taib says while it is possible to increase the price of wheat flour-based food such as roti canai, Mamak restaurants are working hard to absorb costs.

“But there are also other factors that can contribute to the increase, such as rental overhead among others.

“I told my members to sell by volume. Sell them at affordable price but at a larger volume. It is OK if we don’t make as much profit like before.

“We do not want our customers taking the hit from the increased price of ingredients.”

Other wheat or flour-based food includes bread, noodles and spaghetti.

As for multipurpose wheat flour for general consumers, checks at supermarkets find that common brands, including Cap Sauh, are being sold at RM3.60 per kilo and listed as a price-controlled item.

To date, the Domestic Trade and Cost of Living Ministry says it has yet to receive complaints of exorbitant price hikes among food producers.

“If necessary, the ministry can implement price control measures, such as setting price ceilings, as an initial step in resolving issues related to price increases.

“Even though the ministry has the authority to set the selling price of wheat flour, it will use the Price Control and Anti-Profiteering Act 2011 to ensure that no parties take advantage to engage in profiteering.”