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Mon Dieu! Baguette Prices Are Going Up


Wheat prices are driving the bakers of France to add five cents per loaf

"Liberty and baked bread" are all people really need, goes an old French proverb. One of those necessities is about to get more expensive as bakeries raise baguette prices to pass along surging grain costs. "We have no choice," says Michel Galloyer, who runs a dozen Le Grenier à Pain stores in Paris. "Wheat prices have exploded." Galloyer, whose €1.10 ($1.56) baguettes were voted the best in the French capital last year, says he'll have to charge 5 cents more when flour prices start to rise, likely in February.

Wheat prices have almost doubled in the past 12 months as a drought in Russia and floods in Canada and Australia wiped out crops. On the NYSE Liffe options exchange in Paris, March-delivery wheat closed at $364 a metric ton on Jan. 25, up 85 percent from a year earlier.

The French consume about 23 million baguettes a day, supplied by 33,000 bakeries and mass retailers such as Carrefour, the National Association of French Millers estimates. Since 2007, another bad year for wheat, the price of a baguette at the corner bakeries that dot French towns and cities has risen 6.3 percent, according to a study by Familles Rurales, a consumer lobby group. At larger retailers, baguette prices are up as much as 19 percent over the period.

As millers deplete the stocks of wheat they purchased before the latest bad crop, they'll have to start buying more expensive grain. Galloyer says speculators are driving prices up even higher than would be expected. At some point, he figures, supply and demand will balance out. "In April or May, prices [of wheat] will decrease," he says.

Some bakeries are forgoing increases. Boulangerie Paul, which sells its bread through more than 360 outlets in France and 130 stores abroad, doesn't plan to raise baguette prices, according to a spokeswoman who declined to be identified. Carrefour, France's largest retailer, declined to comment on whether it will raise prices this year in response to higher wheat costs.

The daily consumption of bread in France has dropped to 4.2 ounces from 32 ounces in 1900, according to the French millers' association. Still, bread remains an important indicator of the cost of living, says Philippe Chalmin, an economics professor at the University of Paris-Dauphine and an adviser to the government on food costs. "The image of France is of the beret, the baguette, and a bottle of red wine," Chalmin says. "It's a psychological indicator. It's what makes France France."

The bottom line: The global surge in wheat prices will soon affect the price of a baguette, that fundamental symbol of France.

Ruitenberg is a reporter for Bloomberg News.

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