The cost of wheat

[hils]

In my meme notsowise_sage requested a post on the subject of the cost of wheat. This is something I know nothing about so I read a couple of articles. Any inaccuracies in this post are wholly down to my ignorance.

So, ok, from what I can tell the cost of wheat has gone up significantly in the last year or so, meaning that all foods containing wheat are going to go up too.

The first thing that struck me when I read this was the impact this is going to have on poorer families in this country. We already have a huge problem with people being overweight and not eating healthily and this is just going to make things worse. Wheat is an integral part of a healthy diet and it's incredibly the number of foodstuffs that contain it as an ingredient.

In the other hand there are people who are allergic to wheat so there must be wheat-free alternatives to some foods. I suspect, as is the way with specialist food, it will be very expensive though which brings me back to my earlier post of the effect this is going to have on low-income families. Those people with the poorest diet are going to find that it gets even poorer when they can't afford food containing wheat, or the wheat-free alternatives.

Over to you guys to tell me I'm talking crap ;)

Comments

[notsowise-sage.livejournal.com]

You're not talking that much crap. Though my own sympathies are less for the poorer families in this country, than the poor around the world.

In this country we have a government that should be able to prevent people starving (whether it does, or does not is not the issue, it is capable of doing so), in other parts of the world where people rely on food aid, especially with the weather being so crap in many parts of the world, the cost of wheat could see thousands more people die than in previous years through malnutrition - starving.

I do have sympathies for British Farmers too, the ones that grow the wheat. It's not been an amazing year for the wheat grower, but you would think with wheat prices going up they'd make some money back - nope the vast majority are contracted to major bread makers. That means that while wheat was in a cheaper position, supermarkets, and their suppliers snapped up contracts for three and five year periods, so many of our farmers won't see a penny more, as the prices are fixed.

Not that the supermarkets will be limiting price rises on wheat based items, that would be counter productive. Actually to be fair, a lot of wheat is being imported into this country after as every few years we're having poor wheat production. So there is a premium that is hitting. Still, many wheat and grain farmers will be pushed that bit closer to bankruptcy.

The wheat problem was an avoidable one, world wide. With the push for eco-fuels such as ethanol based fuels from food crops, it was made more profitable for farmers to raise bio-fuel crops than wheat crops.

The media paint farmers as greedy because of this, but it's not greed, it's survival.

A farmer owns 20 acres of land.
This land is used to grow crops.
Courtesy of supermarket negotiators, and complete lack of government support or recognition, the profitability of each hectare when growing wheat, and other food products has dropped 17% in the past five years.
Farms are costly businesses, with and without live stocks.
Farmers are losing, on average £100 per acre.
Poor weather due to global warming has seen crops reduced, diseased, and when the weather is wet thousands upon thousands have been spent on drying crops.

Then the government, and associated "Environmentally forward" companies come along, they need big impact spending to show green credentials, bio-fuels are prompted from British agriculture. Suddenly, farmers are being offered £52 more per acre for growing each season of biofuel.
Some bio fuel crops you can grow as much as four or five lots in a year.

Suddenly mortgages seem repayable - if you're lucky enough to get in on it.

The government limits the amount of bio-fuel that can be grown, to protect wheat growth, so some farmers are shafted with the wheat problem no matter what they do.

Bad year, fewer suppliers, wheat stocks are very low, and farmers are getting the blame.

This isn't a particularly British problem, it's being played out in many other countries.

Meanwhile, there are people in Africa, people in middle eastern countries who will be starving this winter, and even into early summer as there isn't the food there to feed them.

And farmers get the blame for short term environmental thinking, poor legislation, greedy billionaire supermarkets, bad luck.

We can't even rely on rice supplies, as China has had an atrocious year weather wise, especially in rice country, which will further drive up the cost of humanitarian endeavours.

As to wheat free foods, these are always sold at a premium, as supermarkets, and suppliers consider them an "at risk" product, as there is only a limited market for them. However, wheat alternatives are often rice based... the flower I buy is primarily ground rice, with a few other things thrown in to make it work. With the cost of rice going up, we could well see wheat free products take a further premium hit. Got to protect those profit margins by hook or by crook - otherwise the world economies will slip further into the red than with the credit crisis alone, and then we are all globally screwed.

*and breath*

[hils.livejournal.com]

Hehe! I have to say I was only looking at this country when I did my post. The global ramifications are far more severe, as you have said

[richandme.livejournal.com]

And as a note the reason that the wheat prices have shot up now is because, in part, of China as well - up until now they had food stocks to mitigate the effect of the shortfall in production, but these stocks have been exhausted. With a major country like China becoming an importer of grain, suddenly the fsct that there hasn't been enough to go around for a few years is noticible.

The other thing to note is that wheat prices going up will increase the price of meat as livestock raisers are reliant on feed.

We're fucked. I'm so glad I'm not going to be a student next year as I've acutely felt the increase in the price of food on my budget.

[notsowise-sage.livejournal.com]

It was the cost of wheat that got me into analysis years ago, back when I was a civil servant, and we had an atrocious August/September with near none stop rain. It was back then that the problems with a silent wheat based economy (oil, gold, and techology are loudly bases for our economy, no one cares about wheat when there isn't a problem), really came to light. Then it was a national issue, the price of bread the following year went up 2p.

The only alternative as a stable all rounder food is rice, really. There are others, but wheat and rice account for the biggest proportion of the world's agriculture, they're both easy to grow in large numbers. Unfortunately they are both prone to weather changes, and disease, and are sensitive to demand.

[notsowise-sage.livejournal.com]

You're absolutely right, I just felt I was waffling too far already. Yeah, the cost of meat will go up considerably. Again, it's going to, and has already, forced livestock farmers into financial difficulty. After a year of two livestock outbreaks, and various scares over bird flu, the cost of meat is already sensitive.

Now is a time to become a fan of root vegetables, like potatoes, parsnips, turnips, carrots, and such. They not immune to poor weather, they are a bit more hardy, and it is expected their prices will remain neutral, with the possibility of the commercial sector pushing down the prices to compensate for the cost of living (giving the nation a discount on something they rarely buy for three months is better than having to pay your staff more long term after all).

[vichan.livejournal.com]

Ahh! I just had a conversation about this with some friends about this. We realized that there's a funny circle to it, (at least on the US side):


- Over the years, the United States essentially puts many US farmers out of business through various means - taxes, trade (to an extent). (Hell, if you wanted to, you could even blame daylight savings time.)
- Greed begins catching up with the US, and the costs of gasoline and oil 'skyrocket.' (Although we're still catching up to other parts of the word, and we still bitch.)
- People begin searching for a new, alternative source of fuel, and come to the solution of ethanol.
- Droughts in China and Australia significantly decrease the season's wheat crop.
- The US crop of wheat is not due until June, and is expected to be signicantly smaller than previous years. Farmers, who used to use their land for wheat, have switched to corn due to the demand for ethanol. (Apparently, corn makes 'better' ethanol, even though it can be made from pretty much any food crop - including wheat.)
- Solution? More farmers! (Too bad they got shut down before this all became an issue.)

[hils.livejournal.com]

I kind of wish I knew more about ecconomics because it sounds really interesting.