Rising Food Prices, How They’re Effecting This Yellowknife Business

Food prices across the country are rising and food suppliers are warning grocery chains that further hikes are coming this fall. Yellowknife is unfortunately not immune to these rising costs, which don’t even factor in the increase in transportation costs due to increased fuel prices and labour shortages.

The balance of rising food prices

As a local food producer, we must constantly balance the costs of goods and services with how much the average consumer is willing to pay for the product we produce, while still breaking even.

Oftentimes when we read or experience increasing food prices we can’t help but wonder why the increase. Producers and suppliers are quick to say it is because of weather or current economic conditions or labour shortages, and so on, but according to the article linked above there is some skepticism about some of those reasons.

Few producers or suppliers will actually show how and why costs are increasing. Maybe a social media post that gets lost after a hot minute, or simply just verbally with customers directly. 

We thought on the other hand, “what if we published how our raw ingredients and expenses are increasing right on our website.” This way, not only would you learn about how our expenses are increasing, but you would be able to see it by comparing invoices from before and after an increase. Never mind the fact that it would then be indexed by search engines and potentially live forever.

How we source organic flour, our biggest expense.

Our year-round bakery “division”, if we are big enough to call it that, relies on one major raw ingredient, flour. When we set out to build Bush Order we knew we wanted organic Canadian flour, fresh from a mill. We are not in the business of using flour that is chemically grown or making bread that is full of filler, stabilizers or conditioners.

We looked all over Western Canada for a supplier back in the spring of 2021, before the bakery was operational. We narrowed it down to four (4) different mills; one small mill in Saskatchewan, one medium mill in Saskatchewan, one small mill in Alberta, and one medium mill in British Columbia.

With flour prices per 20kg bag at wholesale scale sourced, we then needed to do the rigorous work of determining the cost of transportation per bag. We determined that roughly 4000lbs of flour, which is 1818kg or ninety (90) 20kg bags of flour, would last us between six and eight weeks of operation, so we got quotes for four (4) pallets of flour at 1000lbs each from each of the mills across Saskatchewan, Alberta and British Columbia.

We should mention that we also compared different transportation companies too, which was a whole other hurdle to sift through. Some companies only serviced Alberta, some only serviced certain parts of Alberta, some only Alberta and British Columbia, and some had sister companies that connected Saskatchewan to Alberta and then Alberta to the NWT. Logistically it seemed like a nightmare to have to manage. We finally determined that using a company with a national network was the most straightforward.

With these transportation quotes, we were able to then divide the total quote amount by the number of flour bags in the shipment to get the cost of transport for one 20kg bag.

So with the cost per bag of flour and the cost to transport per bag of flour, we were then able to accurately compare which mill would be best and most cost-efficient.

We created a spreadsheet with the name of the mills on one axis and the common types of flour we use on the other; high protein baker’s flour, whole wheat flour, rye flour and red fife flour.

In the end, we chose a medium-sized mill out of Saskatchewan. The shipping costs were definitely higher than if the flour were coming from just Alberta, but because this mill serviced much of Western Canada their cost per bag was lower than any organic mill we could find in Alberta.

How our raw ingredient increased in price

For the rest of 2021, we were set, prices didn’t change, but we were aware that during the 2021 growing season much of Saskatchewan and Alberta had experienced droughts. We knew this could affect our flour prices and it was only a matter of time.

In February of 2022, while making a routine flour order we were informed that a bushel of organic wheat had increased in price from $15 to $28, a 78% increase for the mill, due to a limited harvest. This effectively increased our price per 20kg bag of baker’s flour from $33 to $46. See the invoices below.

How our transportation prices increased

When our flour prices increased in February of 2022 we were still seeing the same base shipping costs, but by our next order in April of 2022 the Russia/Ukraine war was raging on and fuel prices had increased, coupled with a labour shortage in the transportation industry, or so we were told.

Our shipping price for 4000lb of flour increased from $1,295.10 to $1,584.65. The freight charge increased by $75, while the fuel surcharge increased by approximately $200.

How we are managing the increases

The point of this post is not to announce that our bread prices will also be increasing right away, that will take a lot more work to determine. As we know first hand, we can only price a loaf of bread so high.

The point of this post is to show that the costs of goods and services are increasing across the board.

With the pricing of any product, there are many other factors than just the cost of the raw ingredients and transportation costs. There is also the expense of labour and utilities to make or produce the product, the cost of rent or loan payments, the cost of packaging and labels, and the cost of equipment maintenance and administration that all need to be factored in.

This is something that admittedly we haven’t been the best at calculating.

We believe the best way to navigate increasing costs as a community is to be as transparent as possible.

To help us navigate these times we are currently working with an Accounting Consultant who we hope will help us find a clear path forward by early fall.