How high wheat prices are impacting those on both ends of the supply chain

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Posted at 11:02 AM, Apr 15, 2022

Ryan Poe and Jenival Santos live nearly 1,200 miles apart but they are facing similar struggles.

Their livelihoods rely on wheat.

Poe grows it on his Washington State farm and Jenival uses it in almost everything on his menu at City Bakery Cafe in Denver.

Wheat prices have gone up since Russia’s Invasion of Ukraine. The countries are two major global wheat producers.

Selling crops at a higher price can be good news for farmers, but Poe says what’s different today is how much his expenses, like the cost of fertilizer and the fuel, have increased.

The diesel fuel that goes into one 10,000-gallon tank on his farm costs more than $4.00 a gallon.

"Then you look back to a year ago, paying $2, so essentially it’s almost $20,000 more to fill this tank today versus a year ago,” Poe said.

Not only are costs impacting how crops are grown, but also how they're sent down the supply chain.

In the first two weeks of March, as the War in Ukraine was just beginning, diesel prices soared. The USDA says the cost of transporting grain by truck rose more than 20% between March 2 and March 16.

At Santos' cafe, the costs from a strained supply chain are rolled into ingredients like his bread.

"We used to pay $13 to $14 for a bag of flour," he said. "Now, we pay for a bag of flour— $23-$24 a bag."

Santos raised his menu prices only once during the pandemic. He feared raising the prices more would drive people away.

Business at both ends of the supply chain can be unforgiving.

"If you’re looking at a loaf of bread at a grocery store that costs an average of $4, the farmer, out of that $4 loaf, is receiving $0.17 a loaf," Poe said, “So if that price goes up from $4, we’re still basically getting those $0.17 and that's what kind of makes the other challenges, yeah, tricky.”

But, both the farmer and cafe owner, are keeping their faith in what they see as the true product of their work.

“As a farmer I mean you know that you’re feeding the world," Poe said.

“I like to see people's faces, you know when they feel the taste and come out in their face," Santos said of his love of making food. "I mean, you can see it clear, the people's happiness in the face when you see people eating and enjoy the food. That's what makes me happy.”