VOL. 128 | NO. 20 | Wednesday, January 30, 2013
Commission Debates Post-Hostess Bread Prices
By Bill Dries
Shelby County Commissioners approved a $251,958 contract with a Batesville, Ark., bakery that at least for now has a perceived monopoly on baking and distributing large amounts of bread in the region.
Commissioners weren’t happy about the price offered by Flowers Baking Co. of Batesville LLC. But it was the only bidder on what amounts to an emergency contract for the rest of the fiscal year to provide bread and baked products to the Shelby County Corrections Department, Shelby County Head Start and Memphis-Shelby County Juvenile Court.
“We’re going to need to lean on our vendors,” said Commissioner Heidi Shafer who did not vote on the contract. “I’m a little concerned that the vendors seem to be so unwilling to renegotiate pricing on this. Surely they know the school system is going to be included with this and they are not even willing to talk about it?”
Shafer is referring to the consolidation of Memphis City Schools and Shelby County Schools in the coming fiscal year.
“The only way you could have a better price from them was if you bought stale bread,” County Purchasing Administrator Clifton Davis replied as he talked about trying to negotiate a lower price with Flowers. “That is unacceptable for our Head Start and juvenile court program.”
Shafer said what is labeled “stale” is bread that is still good and sold in stores now as day-old bread. She thought the term was “a little perhaps inflammatory.”
“The only way you could have a better price from them was if you bought stale bread.”
Purchasing administrator, Shelby County
“Stale bread is actually bread that is not first day issue,” she said.
Interstate Brands, which had the contract, didn’t bid. That left Flowers as the only bidder.
New bids will be taken in March for the fiscal year that begins July 1.
Thomasville, Ga.-based Flowers Foods Inc., the parent company of Flowers Baking of Batesville, agreed earlier this month to buy the bread brands and 20 bakeries of Hostess Brands Inc. for $360 million.
That includes the Memphis plant, also known as Interstate Brands Corp., at 400 Monroe Ave. Hostess closed the Memphis plant in November and filed for bankruptcy in January.
The Flowers bid for the Hostess brands and bakeries would have to be approved by a federal bankruptcy court and then resubmitted as part of an auction process. A sale could close by the end of April.
The bids on the county contract were due in December.
And by then Flowers was the only option.
“They are the only up-and-running full bakery in this region,” Davis told the commission.
He approached Walmart, Kroger and Target about providing bread. They all buy from Flowers as well and can’t sell that large a quantity to a third party.
Shafer and commissioner Melvin Burgess are already wondering if there could be a larger county government contract for bread and baked goods that includes the consolidated Shelby County public schools system.
“We have a hard time with vendors who provide milk and bread because it’s hard to do business. A lot of people – they can get the product here but it’s very hard to deliver to each different school and location,” said Burgess, who is Memphis City Schools internal audit director. “There needs to be some kind of collaboration. … I think we can really take advantage of it if we all sit down. … I think we can do a lot better as far as cost savings in how we buy commodities.”