Dear Bakery Customer,

Many of you have experienced the rising costs in bakery products and Lithuanian Bakery would like to address the reasons behind this. As many of you know from your trips to the supermarket, prices of products in general are rising. With grain based products this is especially true.

The price of a bushel of wheat has increased in the commodities maket and this trend will continue for the forseeable future. This translates to icreases in the cost of flour that your baker payes each time he or she buys a bag of flour. Many bakeries have seen the cost of their flour bill almost double what is was in Fall 2007.

The cost of wheat is impacted by multiple events. There was less acreage of winter wheat planted than the market anticipated. Farmers are being paid to plant crops for use in ehtanol fuel rather than as food crops. There have been bad crops overseas and with the low U.S. dollar, foreign countries are buying more U.S. wheat. The spring wheat crop that will soon be planted has already been sold at the higher prices. We anticipate that farmers will plant more acreage this spring but we won't see an impact until the fall and even then we probably won't see a change in the commodities market until mid 2009.

In addition to the cost of flour, other commodities such as eggs, butter and shortening that bakers use has risen. Now, with the sugar refinery in Georgia destroyed, ths cost of sugar will begin to rise and could well rival the rise in flour prices

We all know where the cost of gas and electricity has gone and this too plays a role in the bakery product that you buy. From growing and shipping grain to milling flour to baking the final product, the cost of gas impacts the price of the commodity at every step.

The members of the New Jersey Bakers Board of Trade, an affiliate of Lithuanian Bakery, are committed to providing the highes quality products and services for their customers. You can be assured that every effort is being made to control the cost increases.

Your Baker,

John Backiel