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| Wheat price spurs fears of starvation, global warfare |
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| Anyone who has watched the commodity markets over the past year has seen some really remarkable things: corn above $4, soybeans above $9, and, last week, wheat above $8. Each of these remarkable market events has spawned a wave of historical fear-mongering. The jump in corn and soybean prices sparked the food versus fuel debate and the rise of wheat prices to new record levels has produced fears of mass starvation and global warfare. So, dust off your Y2K survival kit and get ready for Armageddon.
A year ago wheat futures prices were in the $3 range, but today they have moved into the $8 arena. Meanwhile in Europe wheat prices are topping $10 and $11 a bushel. The reason is simple: the world supply of wheat is at record low levels. Last year Australia suffered a devastating drought that cut their wheat production in half. This year U.S. wheat production was cut short by an Easter weekend freeze followed by two months of nonstop rains in the western wheat belt. On top of this, France, Germany, the United Kingdom and Russia also produced short crops due to adverse weather conditions. Even South America has had poor weather and is not expected to produce anything but an average wheat crop.
While wheat is grown in about every country in the world, only the above mentioned nations are the big producers who supply most of the wheat to everyone else – and everyone else is not happy.
A quick scan of newspapers in Europe and Asia will reveal that the price of wheat is front page news. In addition, there are predictions of a $10 loaf of bread and food shortages. There are also lots of predictions that the nations who still have some wheat, i.e. Russia and the United States, will stop exporting wheat to keep their own prices down. While this mass media hysteria has not yet made it to the U.S., it is only a matter of time.
The American media loves a crisis, especially one that engenders fear and strong emotions. What could be better than a shortage of the basic staple of the grocery store – bread. So when your ashen-faced local TV reporter stands before an empty bread case at the Kroger store, caused by panic buying and hoarding, here are two things to remember:
There is very little wheat in your loaf of bread. In fact, there is very little wheat in your Wheaties. So any price hike in wheat should have very little impact on the price.
Wheat is a renewable resource. In just a matter of weeks, U.S. farmers will go to the fields to plant a new crop of wheat; and, at $8, you had better believe they will plant a whole heck of a lot of it. Even with an average yield, U.S. wheat producers will do much to reduce the world shortfall in the next nine months.
What about those poor nations who must depend on others for their wheat? First of all, this should serve as an example to us on how important it is to keep our agricultural system strong. Second, it should serve as a wake-up call to those nations, many of whom oppose biotechnology, to get with the program.
Biotechnology has the ability to produce wheat that is resistant to drought. Had France, Germany, India, and others allowed the testing of GMO wheat, things might have been different.
As for those of you who were looking forward to a world food crisis, I am afraid you will have to wait for the next Michael Moore docudrama.
Readers with questions or comments for Gary Truitt may write to him in care of this publication.
This farm news was published in the Sept. 12, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee. |
| 9/12/2007 |
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