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COST OF LIVING

German bakeries fight for survival as costs spiral

Faced with exploding energy and ingredient costs, German baker Tobias Exner has installed new energy-efficient ovens, shortened his opening hours and even considered baking at lower temperatures.

German bakeries fight for survival as costs spiral
Photo: Pixabay.

But “it just doesn’t taste the same without a good crust”, he said, adding that in any case such efforts could do little to counter the existential crisis he and other bakers are facing.

“If the conditions don’t change, then sooner or later a large share of bakeries in Germany will simply no longer exist,” Exner told AFP.

Bakeries in Germany have been among the businesses hardest hit by the economic fallout from Russia’s invasion of Ukraine.

The war has sent energy prices spiralling across Europe, but especially in Germany, which was previously heavily dependent on Russian gas.

“Bakeries all have ovens. Seventy percent of artisanal bakeries have gas ovens and gas prices are going through the roof,” said Friedemann Berg, managing director of the German Bakers’ Federation.

And two of the main ingredients used by bakers — flour and oil — are among those that have been affected by blockades at Ukrainian ports.

Exner’s business is relatively large with 220 staff and 36 branches in Berlin and the surrounding area, leaving it better placed than many to survive the crisis — but even he is struggling.

Wheat is now 2.5 times more expensive than before the crisis, he said, while the cost of a litre of oil has risen from around 82 cents to more than three euros ($2.91).

Dough in the dark

Energy bills for the business, meanwhile, have almost quadrupled compared with 2020.

“You can see that the calculations no longer work,” Exner said to the hum of machines at the company’s main production site in the town of Beelitz.

But Exner is reluctant to pass the cost increases on to his customers, who he simply believes “would not pay those kinds of prices”.

In central Berlin, the mood on the ground appears to confirm his fears.

“Even more? No way. It’s getting extortionate,” said unemployed Gloria Thomas, 56, when asked whether she would be prepared to pay more for her favourite loaf.

Many bakeries in Germany have already gone under as a result of recent cost increases, with others staging protests to demand urgent help from the government.

And there is more at stake than just bread rolls, according to Exner.

“These businesses are often the most important institution in the village — they are at once grocery store, social centre, post office, etc.”

In early September, around 800 German bakeries served customers in the dark for a day to draw attention to their plight.

Insolvency blunder

Germany’s centre-left government has announced relief measures worth almost 100 billion euros to tackle inflation, but small businesses have so far been largely excluded from the help.

Worse still, they were left feeling insulted by controversial comments by Economy Minister Robert Habeck earlier this month.

Asked on a TV panel show whether he thought Germany was heading for a wave of insolvencies, Habeck replied: “I can imagine that certain industries will simply stop producing for a while.”

The comments provoked anger from bakers in particular, who accused Habeck of having no understanding of their industry.

“Habeck is probably not a stupid person, but the question is, is he qualified for the job he has right now? And I would say no,” said Exner.

The Bakers’ Confederation is calling for “quick and unbureaucratic” financial aid.

Bakeries can shave off costs here and there but they “can only do so much”, according to Berg.

If government help does not arrive soon “the future looks bleak,” he said. “It could be that many businesses have to give up their operations or simply file for bankruptcy.”

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ENERGY

Qatar agrees to ‘long-term gas supply’ deal with Germany

Qatar has agreed to send Germany two million tons of liquefied natural gas a year for at least 15 years, officials said Tuesday, as Europe's biggest economy scrambles for alternative supplies after Russia's invasion of Ukraine.

Qatar agrees to 'long-term gas supply' deal with Germany

Qatar’s Energy Minister Saad Sherida al-Kaabi said up to two million tons of gas a year would be sent for at least 15 years from 2026, and that state-run QatarEnergy was discussing other possible deals for Europe’s biggest
economy.

Kaabi, who is also QatarEnergy’s chief executive, said so many European and Asian countries now want natural gas that he did not have enough negotiators to cope.

The talks for the latest deal took several months as Germany has resisted the long-term contracts that Qatar normally demands to justify its massive investment in the industry.

Russia’s invasion of Ukraine in February increased pressure on the German government to find new sources. And the latest deal will not help the country get through the looming winter.

The gas will be bought through US firm ConocoPhillips, a long-term partner with QatarEnergy, and sent to a new terminal that Germany is hurrying to finish at Brunsbuttel.

“We are committed to contribute to the energy security of Germany and Europe at large,” Kaabi told a press conference after the signing ceremony with ConocoPhillips chief executive Ryan Lance.

Lance hailed the accord as “a vital contribution to world energy security”.

READ ALSO: EXPLAINED: What are Germany’s alternatives to Russian gas?

Qatar last week announced a 27-year agreement to ship four million tons a year to China. It said this was the longest contract agreed in the industry.

Qatari officials would not discuss prices but industry analysts have said Germany will have to pay a premium for the shorter contract and the hurried start to deliveries.

Intense demand

Kaabi again stressed the “sizeable investments” that his country has made in extracting gas for deliveries around the world.
But he also said that Qatar was negotiating with German companies to further increase the “volumes” being sent.

The gas will come from the North Field East and North Field South projects that Qatar is developing with ConocoPhillips and other energy multinationals.

North Field contains the world’s biggest natural gas reserves and extends under the Gulf into Iranian territory.

Through expansion in North Field, Qatar is aiming to increase its production by 60 percent by 2027. With increases in international prices, the value of its exports has almost doubled in the past year, state media said
recently.

Asian countries led by China, Japan and South Korea have been the main market for Qatar’s gas, but it has been increasingly targeted by European countries since Russia’s war on Ukraine threw supplies into doubt.

“There is very intense discussions with European buyers and with Asian buyers,” Kaabi said, highlighting the “scarcity of gas coming in the next few years”.

“We do not have enough teams to work with everybody, to cater for the needs” of all countries making demands.

Kaabi said the deal with China’s Sinopec showed that “Asian buyers are feeling the pressure of wanting to secure long-term deals… I think we are in a good position.”

The Brunsbuttel terminal supplies customers of German energy companies Uniper and RWE, and Economy and Energy Minister Robert Habeck said the two firms “have to buy on the world market.

“It is clear that the world market has different suppliers, and it is smart from the companies to buy the most favourable offers for the consumers on the world market, and that includes Qatar.

“But this is not the only supplier on the market.”

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