Mary Morran at Avalon International Breads in Detroit (Photo by Sarah Hulett)
Short supply and high demand for wheat means
prices are at record levels, and rising. But the high
cost of wheat is bad news for people who buy it. And
in North America, where most people’s diets are based
on wheat, that means just about everyone. Sarah Hulett
has this look at what’s behind the run-up in prices:
Transcript
Short supply and high demand for wheat means
prices are at record levels, and rising. But the high
cost of wheat is bad news for people who buy it. And
in North America, where most people’s diets are based
on wheat, that means just about everyone. Sarah Hulett
has this look at what’s behind the run-up in prices:
Jackie Victor is sitting on a stack of 50-pound bags of organic wheat flour inside the
bakery she co-owns. And these days, it’s a pretty expensive seat.
Victor says in the last year, what she pays for those bags of flour has doubled.
“So it’s a very scary time, and I don’t think just – really for the industry, although it is
scary for us – it should be a warning sign for the country that something here is amiss.”
In the fall, Victor raised her retail prices at Avalon International Breads in Detroit.
So a loaf of bread that comes out of this batch getting mixed by baker Kevin Boyer will
cost you 50 to 75 cents more today.
“This is the multigrain bread. This is our Motown Multigrain.”
Soon, one of those loaves will probably cost even more, because the price of flour keeps going up.
(forklift sound)
Avalon Bakery buys its flour from Dawn Food Products. Inside one of its central
warehouses, forklift operators move pallets of baking ingredients into tractor-trailors. It smells like a kitchen pantry. And that’s basically what this is: a gigantic
pantry full of baking ingredients that will be shipped all over the world.
Miles Jones points out a pallet full of wheat gluten, which is used in most commercially-produced baked goods.
“That’s vital wheat gluten there. The price of that vital wheat gluten, just as an example,
has about tripled here in the last six months.”
Jones is co-chairman of the board at Dawn Foods. He’s been in the baking industry for close to four decades, and he says he’s never seen prices so high.
There are several reasons for the spike in wheat prices. Drought and other bad weather
wiped out a lot of the global wheat crop over the past two years. And fast-developing countries like China
and India are consuming more food made from wheat.
And then there’s the ethanol factor. More farmers are planting corn to sell to ethanol
refineries. Jones says that’s gobbling up land that used to be planted with wheat and other
crops. And he says it’s put us on a dangerous path.
“The end results are in the paper every day. You can see the skyrocketing food prices. And when you start trading food for energy, that’s not a good trade long-term.”
With wheat prices at record levels, more farmers might decide to plant it this year. That would boost supply and bring prices down.
Bruce Babcock is an economist, and he heads the center for Agricultural and Rural Development at Iowa State University. He says the test for that theory will be the amount of spring wheat that gets planted in April and May.
“The problem of course, for farmers, it’s not really a problem, it’s a great thing for farmers, is that they can pick wheat or soybeans or canola or any crop and the price is out of this world. So because the price of everything else is up so high, I don’t think we’ll see wheat increase as much as we would hope.”
Babcock says there is some good news on the global supply front. Australia and Argentina are expected to harvest a normal amount of wheat this year. Those are two major wheat producers that had a couple of years of terrible crops.
A big question will be whether farmers in the US and Canada will get the kind of weather they need and a bumper wheat crop this year.
For The Environment Report, I’m Sarah Hulett.