Counting the cost of wheat price hike
The BBC Online
World wheat prices have risen to a 10-year high following a dramatic fall in harvests sparked by a severe drought in Australia and crop diseases across parts of Europe and the Americas.
Meanwhile, demand for wheat-based produce is reaching record levels and the land once used to grow wheat is being threatened by the demand for biofuel crops.
Five of our correspondents have been considering the possible implications of soaring wheat prices for producers, consumers and regional politics.
Across Central Asia the talk has been of bread, and fear. In this region of extreme poverty and fragile political stability, a loaf of bread is becoming too pricey for too many.
With the winter just around the corner, the concern is that the states of Kyrgyzstan, Tajikistan and Uzbekistan will not be able to meet a demand for basic foodstuffs, and that discontent may spread across the region.
In Central Asia, where most of the media are not free, measuring the scale of any problem is a tricky task.
But there have been reports of the so called "bread riots" in Uzbekistan, where public protests are extremely rare and where demonstrators risk serious jail terms.
In neighbouring Kyrgyzstan, the anger is much more clear.
Recent discussions on one of the country's online political forums focused almost entirely on bread prices. Many participants seemed angry at the government's failure to develop agriculture and stop relying on exports.
However, the region's main exporter, Kazakhstan, is confident and relaxed.
Kazakhstan, with its booming oil economy, is also one of the world's top grain producers. As a result of the price hikes at the international grain market, the government has increased export prices, but it has also managed to stabilise prices domestically.
But that is hardly a guarantee of immunity against the trouble across the border.
Kazakhstan is surrounded by poor, weak, unstable and now increasingly hungry neighbours, in a region where trouble has always travelled fast.
CHINA - Michael Bristow, Beijing
Inflation in China is higher than it has been for more than a decade - mainly because of the rising cost of basic food items, including wheat.
The cost of rice, wheat and maize was up by 8.4% in August compared with a year earlier, according to government figures.
Government officials blame rising prices on the world's increasing demand for corn to make bio-fuels.
Rising prices have even affected sales of a famous Chinese snack - Lanzhou hand-pulled noodles - in the city that gave the dish its name.
Lanzhou residents have had to pay up to twice as much for a bowl of the noodles, usually served with beef and turnip slices.
Despite this, grain prices have not risen as much as other basic food items.
Pork prices have nearly doubled in a year, mainly because of a shortage of supply.
Supplies of wheat and other grains will be maintained this year, officials say, despite floods and droughts.
AUSTRALIA - Phil Mercer, Sydney
Australia is one of the world's leading wheat exporters. It cultivates millions of acres with its main overseas markets in Asia and the Middle East.
It is estimated there are 30,000 growers spread across the continent from Queensland in the east to Western Australia.
The Australian Wheat Board (AWB) says sustained international demand has generated "historically high price levels".
The domestic market has also surged with Australian wheat fetching US$340 (£169) a ton.
This is welcome news for farmers, who have endured several years of drought but the implications for consumers of wheat across the globe are considerable.
In 2006 Australia's wheat harvest was a disappointing 9 million tons.
This years yield is expected to reach 15 million tons - far less than had been predicted because of the chronic lack of rain. About half will be sold abroad.
This is contributing to a worldwide shortage of grain, increasing prices and economic concerns for wheat consumers.
Australian wheat is used in flour, noodles and animal feed. Other producers - from bakers to sheep farmers - will almost certainly pass on rising costs to customers.
AWB believes domestic wheat prices will fall by the middle of next year.
ITALY - David Willey, Rome
Consumer associations here organised a daylong shoppers' boycott of pasta - Italy's national dish - earlier this month, in protest against what they say is a sudden unjustified hike of 30% in the price of this staple food.
The price increase, manufacturers reply, reflects the worldwide increase in grain prices, and a shortfall in local production of durum wheat.
This is the superior quality of wheat used to make the best quality spaghetti, fettuccine and other varieties of pasta.
About half of the 11 million tons of both soft grain and durum wheat milled in Italy each year has to be imported.
Italian millers claim some mills could be forced to close during the coming years due to a lack of global supply.
The pasta boycott flopped, but the argument between consumers and suppliers continues over just why the price of Italy's staple food, in common with many other items in Italian shoppers' baskets, has shot up this autumn.
Bakers have also raised bread prices, although not by as much as the pasta makers. The government has done nothing. It says that bread and pasta costs still represent only a tiny fraction of the average family budget.
RUSSIA - Artyom Liss, Moscow
For Russian grain exporters, the global price hike couldn't have come sooner.
After a quiet summer Russian experts are hoping their wheat will harvest more than $400 (£198) per ton and they expect the country to export over 13 million tons.
There seems to be insatiable demand for Russian wheat - the only limit is the lack of transport infrastructure in Russia itself.
According to Sovecon, a major Russian grain consultancy, the country lacks even such basic facilities as railway cars.
But for most ordinary Russians, the picture is not so bright. Locally, grain is up to 60% cheaper than internationally.
So the worry is that producers will start exporting wheat which had been earmarked for domestic consumption.
This could be a very damaging blow, as grain and wheat products are an ever popular food choice for some of the poorer Russians.
And even those who can afford a more varied diet might still be hit by the aftershocks. Rising grain prices can affect the costs of meat production, both in Russia and abroad.
At the moment, most of Russia's meat is imported, at prices set before the wheat markets spectacular turnaround.
But the fear is it will not be long before the new prices of wheat filter through - and then some of the Russian consumers could be in for a nasty shock at supermarkets.
Story from BBC NEWS:
news.bbc.co.uk
Published: 2007/09/21 10:47:55 GMT
© BBC MMVII |
