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Economic News Grim


by turfgrrl


March 18th, 2008 · No Comments

The Courant manages to run two articles that are completely related yet strangely don’t mention each other. The first, The Wheat Factor; Agricultural, Financial And Energy Issues Have Sent Prices Soaring is about the rising prices of wheat. Granted its an AP “filler” story in the business section, but wouldn’t someone over at the business desk have asked the obvious question in, Area Restaurant Closings Are Called Signs Of The Times, when they feature the closing of Macaroni Grill?

The wheat article states:

Poor wheat harvests in Australia and parts of Europe and the U.S. have caused China and other Asian countries to buy up more American crops, which are especially attractive because of the weak U.S. dollar.

At the same time, the American crop is shrinking because of federal incentives to grow corn for ethanol. And skyrocketing gas prices make it costlier to get any wheat to market. Those same pressures have also made it more expensive to supply feed grains for livestock.

At Bob’s Red Mill flour company, wheat flour has typically been subject to retail price adjustments every five years. Now those increases are happening almost monthly.

“You look at the price and you say, ‘Oh, my gosh,’” said Dennis Gilliam, executive vice president of sales and marketing for the company in Milwaukie, Ore. “It keeps climbing every day.”

Wheat historically trades at $3 to $7 a bushel.

But last week, futures of spring wheat — which produces the flour used in hearth breads, rolls, croissants, bagels and pizza crust — were close to $18 a bushel on the Minneapolis Grain Exchange. They climbed as high as $24 in late February.

Consumers pay an additional penny on wheat products for each dollar the price-per-bushel increases. “It’s a huge impact,” said Steve Mercer, spokesman for U.S. Wheat Associates, an industry group.

While the restaurant closing article states:

 The Macaroni Grill in Manchester is the second in the Hartford area to close in two months. The first was the one at Bishops Corner in West Hartford. Some of the employees who lost their jobs in West Hartford went to work in Manchester.

Brinker International Inc., the owner of the Macaroni Grill, Chili’s and On the Border chains, wouldn’t comment on the specific reasons for closing the Manchester restaurant, the last remaining Macaroni Grill in Connecticut. The company, which is trying to sell the Macaroni Grill chain, has made similar closures in other states.

Douglas H. Brooks, chairman and chief executive of Brinker International, told analysts in a conference call in January that “we are operating in one of the toughest environments in company’s history.” Brooks cited the economy, a decline in consumer confidence and increased costs for food, energy and labor.

In Manchester, McNamara said competition among restaurants had grown fierce, especially since several had overlapping Italian themes. And although the restaurants did a good dinner business, lunch traffic — a key to any restaurant’s success — was more spotty.

Any business which is dependent on wheat, say Italian restaurants which serve pasta, are going to be affected by rising wheat prices.

Tags: Economy

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