The Sunday Leader

Wheat Flour Prices Push Bakers Out Of Business

Bakery owners in Sri Lanka have said that thousands of bakers have been forced to close down their business due to the increase in wheat flour prices.

The bakers have said that some 2,000 bakers islandwide have been forced to close down their businesses while hundreds of others who depended on the bakery industry have lost their jobs.

President of the All-Ceylon Bakery Owners’ Association N. K. Jayawardena has told the media that the government’s decision to ban wheat flour based food items from school and state hospital canteens has dealt a severe blow to the bakers.

Meanwhile the government’s ban on wheat-flour products has extended to the local prisons as well. Prisoners are now served rice for all three meals.

The government has called on bakers to use rice flour as an alternative to wheat flour.

According to the All-Ceylon Bakery Owners’ Association, the quality rice flour for bread production is hard to find.

5 Comments for “Wheat Flour Prices Push Bakers Out Of Business”

  1. weerasuriya

    If we can reduce the use of wheat flour it is a significant achievement by both ways save foreign exchange as well as the public health

  2. Pan Nathnam Cake Kapalla

  3. Bandaraa

    The Editor

    This article was published in you news paper on 4th may 2008. The contents will be useful to the present day bakers to overcome their problems.

    Wheat alternates & baking industry

    By Sunil Keppetipola*

    The baking (bakery & biscuit) industry should look at options to change over to locally available raw materials as far as possible since imported raw materials are not going to be cheap any more.

    Selection of raw material is important and the quality of raw materials should be of industry approved standards. Industry staff should be motivated to prepare cost effective fillings & creams for the products they make while maintaining quality. This could be done only by training the staff to carry out trials and getting them involved in the innovation process of new product development.

    A key area that has to be addressed urgently is to make available milled flour (rice, kurakkan or corn), where the particle sizes will be fine. At present locally produced flour is pounded flour where the particle size is coarse and the structure is damaged. Hence there will be new business opportunities for small time and medium term local business community to start up flour mills regionally to support the baking industry.

    As we are aware, the global economic environment is changing rapidly and consumer eating habits are subject to change at a faster rate creating many challenges for personnel in the food industry. The food raw material shortages & escalating prices, the increasing cost of power & energy and cost of production, administration & distribution will greatly influence the determination of the final finished product pricing.

    Will the finished product pricing be affordable and acceptable to the consumer? Well this is yet to be seen and identified in the future since income levels of consumers have not increased proportionately in relation to cost of living.

    As far as the baking industry in Sri Lanka, it is time for a major change to re-invent the industry and prepare their human resource asset base to face the challenges in the future. Sharp price increases of wheat flour, bakery ingredients, cost of power & energy (including LP gas) will take place due to external factors which the industry will not be able to control. The effect on these factors will have a major impact on the final pricing of the finished product.

    New product innovation based on changing eating habits of consumers, developing cost effective recipes while maintaining quality of the finished product, reduction in overhead cost (production, administration & marketing cost) will be some of the key factors the personnel in the baking industry will have to carry out in a systematic manner and face the challenges. Manufacturing of baked products at cost effective rates and priced at an affordable rates to consumers will be the key factor to be in business successfully.

    Wheat flour is currently the key base ingredient in the baking industry. Sri Lanka is a country where wheat is not grown and the country’s entire requirement is imported from wheat marketing nations. Due to the drop in production of wheat internationally and the product also being channelled for the preparation of bio fuels, the future pricing of this product will be uncertain and increasing prices are forecasted.

    The government is also discouraging wheat based products consumption in order to promote rice based products and increase rice production locally in order to save the massive amount of foreign exchange that is used up for importing wheat grain & wheat flour.

    Other key bakery ingredients too have increased and will increase further in the future. Fats & margarines, bakers yeast, vegetable oils, sugar, skimmed milk, flavours & colouring and dried fruits, are some of the other ingredients which are imported to the country or produced in Srilanka with imported raw material (palm oil, palm olein and palm stearine) which cost the country a large amount of foreign exchange.

    Prices of locally purchased ingredients like salt, spices, fish & meats and vegetables have increased over a period of time and if cultivation processes are not managed efficiently and productivity not increased, the prices of these items too will increase in the future.

    With these major changes taking place, will the baking industry survive and continue to manufacture traditional baked products at affordable prices to consumers in Sri Lanka?

    However, the eating out habit which came in as a fashion or tradition in urban areas towards the latter part of the 1990s may change once again and consumers will revert to home cooked traditional foods. This will happen mainly from the health conscious segment of consumers who will want to avoid junk foods. This too will have an impact on the food industry & industry personnel should be concerned and take precautionary measurers in order to stay in business.

    New product innovation is required in order to cater to the already sick and the busy present day younger generation. Therefore a major change is necessary in the baking industry to re-discover and face the challenges in the future. Initially reducing wheat flour usage by 10% – 20% and blending of kurakkan flour, red rice/white rice flour, corn flour (which is available locally) will certainly make a nutritious loaf of bread/biscuit with fibre. It could be done with other baked products like buns, cakes and pastries. This will help to reduce expensive wheat imports by 10-20% and will assist the government to save foreign exchange which could be channelled to promote locally grown wheat flour substitute crops which could be made available to the industry at competitive prices.

    During the second phase of the process of reducing the wheat flour usage by 50% there is an option of blending other types of flour. However wheat gluten will have to be mixed up to 15% to the wheat flour/rice flour or kurakkan flour blend (35% wheat flour, 15% wheat gluten & 50% rice or kurakkan flour).

    Wheat gluten will have to be imported from a wheat producing country. This product is used for preparation of bread and other yeast raised baked goods in rice growing countries like Japan, China, Taiwan & Vietnam.

    The industry should also look at milled rice flour based products acceptable to the local consumers pallet. Promoting traditional Sri Lankan sweet meats will be one option. India, Japan, Taiwan & China manufactures a large range of rice flour based products and these product recipes could be modified to suit the Sri Lankan consumer pallet.

    Organizations like Unilever in partnership with US Associate, Singapore contributed to develop the baking industry in Sri Lanka. Masterline Baking School was an institute set up by Unilever to train industry personnel while ensuring the proper application of bakery fats and margarines They also guided trainees to use standard recipes and the use of correct process procedures in order to produce quality baked products.

    Unilever has however since moved out of this trade and allegedly no longer actively supports the baking industry in Sri Lanka.

    However Ess Kayee Enterprise is another company which supported the development of the baking industry. The main wheat supplier to the country has allegedly not contributed enough for the development of the baking industry. Though they have the facilities to train industry personnel and upgrade the bakery trade, their key objective is to allegedly look after the commercial interest of the organization.

    At present other bakery material trading companies provide services in order to trade their products which are imported from Malaysia or Indonesia. However the support services provided by these organizations are not adequate for the future development of the baking industry based on the changing global economic environment and catering to the rapidly changing consumer eating habits.

    But whoever acts fast will re-innovate the industry and enjoy a successful growth in their business operations while others will drop out in stages as and when the consumer rejects their services.

    This was clearly shown when most of the large industrial cake manufacturers who produced and distributed cakes added with preservatives in order to extend shelf life for 30 days have gone out of business since the modern generation has rejected their product and changed to fresh cakes that are freely available at the local bakery or pastry shop.

    The eating out habit which came in as a fashion or tradition in urban areas towards the latter part of the 1990s may change once again and consumers will revert to home cooked traditional foods. This will happen mainly from the health conscious segment of consumers who will want to avoid junk foods.

    *The writer at present works as an adviser on Product Marketing in the Sri Lankan operations of MOI Foods International Malaysia / Singapore. He also has over 10 years experience in production & process management of FMCG and Industrial Food Products with Unilever Ceylon. Further, he has served the organization as a technical/sales adviser to the food industry for a further period of 8 years. He also accounts for over 8 years work experience in sales management and product category management with this company.

    He has also served at Perera and Sons Bakers Ltd., as deputy general manager and has held marketing management positions with MOI Foods International Malaysia/Singapore, Pelwatte Sugar Industries Ltd, and Pelwatte Sugar Distillers (Pvt.) Ltd.

    He holds diplomas in Baking Science & Technology, from UFM Baking Institute Thailand and Biscuit Cookie & Cracker Technology from US Wheat Associates, Singapore. Keppetipola has also served as a guest lecturer for the Sri Lanka Institute of Tourism & Hotel Management and Praguna Management Consultancy Services.

  4. Damn good for the bakers for unscrupulously in creasing the loaf with almost the same amount that of the increase in a kilo of flour. I am happy that they got it where it hurt. It is we who should have done this in the first place creating a consumer resistance on bread prices. But in this modern day and age bread or wheat products are a necessity and like that Basuto proverb says: ‘I you want to get rid of something, you had first better make sure that you replace it something of value.’

  5. raj

    if anyone can understand the effects of loosing GSP plus, people can understand the government’s need to cut the imports of wheat to reduce lost in foreign income. By cutting the imports of the wheat, government can reduce the effects of losing GSP plus. Will that work positively or negatively? wait and see.

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