Bakers are talking depression, not recession
For the first time in more than 90 years, a family -un bakery in Atlantic City, N.J., is trying to keep it’s profit margins above water, and that includes the years during the depression.
Frank D. Formica, owner of
Formica Brothers Bakery , testified late last week before the House Committee on Small Business and he painted a grim picture for legislators.
The bakery uses 50,000 pounds of flour a week, and over the past 30 years or so the prices have averaged between 11 cents and 17 cents a pound. But as of September 2007, prices began to escalate rapidly reaching a peak of 60 cents a pound.
He was paying $7,000 a week for flour and $364,000 annually. But today, he pays out $20,000 a week, or $1,040,000 a year.
Who pays for the premium?
Formica says he passed on some of the costs to customers but has had to absorb the majority of the increase.
Because of the price hikes, he says, a family tradition is “at risk of becoming extinct.”
“Today,” he adds, “we are facing more challenges than we did during the lean times of the Great Depression.”
Congress keeps holding meetings with small business owners about escalating food prices, fuel prices, etc., but what do entrepreneurs have to show for it? Not much.
Small business owners want action but it seems legislators don’t even know how to begin tackling the problem.
“Like other Americans, entrepreneurs are facing record oil prices, tightening credit markets, and a lagging economy,” says Chairwoman
Nydia M. Velázquez of the Committee on Small Business. “The situation presents serious challenges, so we shouldn’t waste time despairing or pointing fingers. Instead, we should focus on understanding the dynamics of the problem and the how the pieces of this puzzle come together.”
Formica, who spoke on behalf of himself and the
American Bakers Association , doesn’t seem as puzzled.
“High commodity and food prices have been caused in part by many factors, including increased worldwide demand, a weakened dollar and adverse weather events such as last year’s drought in Australia,” he explained in his testimony. “But the ethanol program, which continues to subsidize food for fuel, and other government programs that pay farmers not to farm their land but let acres sit idle, have also led to the current food crisis.”
And he even had an action plan for lawmakers that included waiving ethanol mandates and increasing wheat plantings.
“I believe that implementing the changes to our current energy and agricultural policies as outlined in this statement will not only allow the market to correct itself, but more importantly, will ease concerns regarding the threat of food shortages,” he stresses.
Whether you agree with Formica or not, at least he has a plan.
