Mother Talkers

The cost of grain

Tue Mar 11, 2008 at 06:57:03 AM PDT

Wow! Anyone else noticing the increase in the cost of baked goods?  Around here, we're seeing an increase in prices in bakeries, pizza places, and (horrors!) bagels!

Seems it's a global shortage of grains.

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The cause seems to be that there are more people worldwide

Many factors are contributing to the rise, but the biggest is runaway demand. In recent years, the world’s developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards.

and those people want more wheat - eating like Americans

“Everyone wants to eat like an American on this globe,” said Daniel W. Basse of the AgResource Company, a Chicago consultancy. “But if they do, we’re going to need another two or three globes to grow it all.”

It's a problem for us in the US, because food prices are so connected to inflation.  And an even bigger problem in countries where having enough food is an ongoing issue.

Good news for farmers, though, who now have several profitable crops to choose from.  In the past, corn has been the overwhelming crop, but now other crops will pay off

“Oh, my goodness, look at that,” Mr. Miller said. Barley was $6.40 a bushel, approaching a price that would tempt him to plant more. Soybeans were $12.79 a bushel, up from $8.50 in August.

The frozen earth outside was only a few weeks from coming to life, but Mr. Miller was happily uncertain about what to plant. Last year, the decision was easy for Mr. Miller and everyone else: prices of corn were high because of new government mandates for production of ethanol, a motor fuel. This year, so many crops look like good bets, and there is so little land on which to plant them.

“I’m debating between spring wheat, durum wheat, canola, malting barley, confection sunflowers, oil sunflowers, soybeans, flax and corn,” Mr. Miller said.

When things are this valuable, you have to protect them

Around the world, wheat is becoming a precious commodity. In Pakistan, thousands of paramilitary troops have been deployed since January to guard trucks carrying wheat and flour. Malaysia, trying to keep its commodities at home, has made it a crime to export flour and other products without a license.

But what if our spaghetti gets out of hand?

In the United States, the price of dry pasta has risen 20 percent since October, according to government data. Flour is up 19 percent since last summer.

Actually, all joking aside, the international part of this is interesting.

Nigeria grows little wheat, but its people have developed a taste for bread, in part because of marketing by American exporters. Between 1995 and 2005, per capita wheat consumption in Nigeria more than tripled, to 44 pounds a year. Bread has been displacing traditional foods like eba, dumplings made from cassava root.

Nigeria’s wheat imports in 2007 were forecast to rise 10 percent more. But demand was also rising in many other places, from Tunisia to Venezuela to India. At the same time, drought and competition from other crops limited supply.

So wheat prices soared, and over the last year, bread prices in Nigeria have jumped about 50 percent.

With all the talk of rising fuel costs, are you seeing the rising cost of wheat and baked goods?

Tags: wheat, international economy (all tags)

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