Factors affecting wheat bread prices
2013
Kantike, I., Latvia Univ. of Agriculture, Jelgava (Latvia). Faculty of Economics | Eglite, A., Latvia Univ. of Agriculture, Jelgava (Latvia). Faculty of Economics
Bread prices and the factors affecting them were studied in Latvia within an ESF project*. The research aim of the present paper is to identify the most significant factors affecting bread price fluctuations. The grain market was studied first to find out the most significant factors affecting a bread price. The most significant factors affecting grain prices in the world are weather conditions (which affect crop yields), currency exchange rate fluctuations, speculations on markets of agricultural goods, and political decisions. In Latvia, food-grade wheat prices have increased 2.4 times, while food-grade rye prices have increased 2.3 times from 2005 to 2011. Energy prices continue to increase in the world, which also affects the growth in food prices, including bread. A lot of manual work is used in the process of bread production, which might account, on average, for 37% of total variable cost in bread production. The average gross monthly wage has increased 2 times in Latvia in the period of 2005-2011. Owing to these factors, the retail prices of wheat bread, and rye and wheat bread have increased 2 times in Latvia in this period. After studying the bread prices before 2005, i.e. Latvia's accession to the European Union, one can find that the bread retail prices have had insignificant fluctuations, the range of which was analogous to that observed in Latvia's period of independence from 1925 to 1940. The paper's research object is wheat bread price changes affected by the respective factors. The paper's research aim is to identify the most significant factors affecting the price of wheat bread.
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