Bread Prices Soar but Who or What's to Blame?

May 1, 2008— -- When Sen. Chuck Schumer, D-N.Y, held up a loaf of light wheat Pepperidge Farm bread at a hearing on Capitol Hill Thursday and said his family is spending $40 more per week on groceries this year than it did last year, he admitted that they can afford it. But many Americans cannot.

"We buy this light wheat bread, like this loaf here," he said. "We're paying almost four dollars."

That figure is up from about three dollars a year ago. But Congress heard very few easy answers for what has caused that dollar increase in bread prices, and no agreement on what should be done about it.

Rising food prices are causing unrest in developing nations and making life difficult for low-income Americans. But while the effects of the prices are evident, the causes are not.

Lawmakers heard from a baker who said the cost of his wheat has more than tripled in the past year, leading to pricier bread and layoffs at his bakery.

He questioned why the government is still encouraging farmers to produce corn for ethanol and energy when the prices of food are so high.

"Why are we putting food in our gas tanks instead of our stomachs?" asked Richard Reinwald, owner of Reinwald's Bakery in Huntington, N.Y., and an active member of the Retail Bakers Association.

Tom Buis of the National Farmer's Union countered, "To make the allegation that corn is taking food out of people's mouths is a real stretch."

Buis, a former farmer and now lobbyist for farmers, said the high price of wheat has more to do with the price of oil and bad worldwide weather in wheat-growing regions last year that has dwindled world supply of grain.

Farm-state Sen. Sam Brownback, R-Kan., agreed with Buis.

"I'm sorry about the price of your bread," he said to Schumer. "But the amount of wheat in that bread isn't much."

Brownback pointed to the weak dollar as a reason for the higher food prices. But he argued that a weak dollar is not all bad; it has, he said, improved farmer's ability to export their crops.