The baking industry is grappling with serious supply chain and commodity cost challenges that are emerging even as the pandemic is not yet out of the picture.
The range of hurdles — from ingredient shortages to workforce challenges — have created a complex situation that needs to be addressed, according to an American Bakers Association podcast episode on Bake to the Future that spotlights these issues. Many of the challenges result from pandemic-driven global disruption of connected supply chains.
"It’s like a perfect storm,” said Lee Sanders, ABA’s Senior Vice President, Government Relations and Public Affairs, who spoke during the podcast. “We have a lot of different pressures on the industry.”
Robb MacKie, ABA’s President and CEO, another podcast speaker, said ABA is already pursuing proactive solutions on the government and industry fronts.
The ABA executives were interviewed by Katie Juhl, the association’s Director, Marketing and Communications, and Hailey Blumenreich, Marketing and Communications Manager.
Intense inflationary pressures are seriously impacting the baking industry and consumers. While this involves surging wheat prices that translate into higher flour prices, it goes beyond that as well for this industry.
“Every input cost for the baking industry is up, in some cases to record levels,” MacKie said. “And it’s not just ingredients. It’s equipment. It’s packaging.”
There’s a need to reduce pressures until supply chains can readjust from the effects of the pandemic, MacKie said.
ABA is working collaboratively with the Biden administration, members of Congress and its own association members to make progress. The association is proactively providing input to USDA and FDA about supply chain disruptions and rising costs at a time when those agencies are highly focused on supply chain challenges.
The inflation problem is playing out as the industry faces shortages of crucial baking ingredients — from oils to gluten. Global supply chain disruptions during the pandemic — including bottlenecks at ports — are among factors precipitating the shortages.
The lack of adequate supplies of wheat gluten, a critical ingredient for baking products, follows years of declining domestic production and increased reliance on international sources for this ingredient.
Meanwhile, soybean and other vegetable oils required by the baking industry are also in the eye of the supply storm. A major driver is the growing demand for soy oils as ingredients for biodiesel and renewable diesel.
“We're competing with federal government mandates that are being accelerated under this administration for the next generation of clean diesel,” MacKie said. He added that while the industry supports cleaner diesel, it also needs more time for the oils supply and demand situation to balance out.
ABA is working with a range of stakeholders, including at the federal and state government levels, to explore solutions, Sanders said. “We’re putting a coalition together and strategy is needed to help with this volatility,” she explained.
The baking industry’s efforts to overcome logistics hurdles are complicated by the difficulty in finding adequate workforce talent — especially truck drivers. While this problem started before the pandemic, it has been exacerbated by the continuation of federal government pandemic emergency relief packages, including enhanced unemployment, which has led many job candidates to continue to stay out of the workforce, MacKie said.
Sanders said ABA supports the Congressional DRIVE-Safe Act, an apprenticeship-type program that would help increase the talent pool by enabling younger drivers to begin work before they turn 21 years old — partnered with a seasoned driver. “It would help encourage them to select truck driving and the baking industry for their career,” she said.
A Need for Industry Advocacy
ABA members can make a difference by advocating for industry needs at this crucial time of transition and turbulence, MacKie said.
The association is sponsoring a June 16 “Virtual Fly-In” meeting to educate members of Congress on commodity and workforce priorities. ABA Members are urged to register for this online program.
“There’s no better advocate for the industry than the industry itself,” MacKie said. “But that requires writing the letters, making the phone calls and participating in the Zoom meetings to tell the stories.”