Monday, February 18, 2008

How much is the rising flour price connected to wheat prices?

On both sides of the international border, farmers have been frustrated to hear consumers — and media — blame higher food prices on the better prices seen for commodities.

First of all, farmers do deserve higher prices for the grains and commodities they produce.

However, it is incorrect to assume that farmers are enjoying windfalls thanks to the higher food prices seen on store shelves.

Lorne McClinton is a Saskatchewan wheat farmer who is also an agriculture journalist in Canada. He writes for The Furrow in the U.S. and other publications in North America.

McClinton shared some of his frustrations today on the Canadian Farm Writer Federation listserv, and helped put into perspective what is happening with grain prices in Canada and what it means to farmers there.

“The mainstream press ran a story on the weekend about how increasing wheat prices have doubled the price of flour,” wrote McClinton. “The story also gave the false impression that this would automatically double the price of bread, too. While the price of grain is one component of a food product’s final price, it is not the only component, and in most cases not even the main component.”

McClinton then gave a few statistics to put things into context.

“A bushel of top quality Canadian hard red spring wheat makes approximately 67 -16 oz loaves of bread. Assuming a wheat price, to producers, of $8 a bushel, there’s about 12 cents worth of wheat in a loaf of bread. Even if wheat hits $20/bushel, that would work out to about 30 cents per loaf, well below the price spread bread between Safeway and 7/11.

“Makers of top quality pasta, made from semolina, have a bigger reason to complain about rising prices. One bushel of durum (60 lbs) makes 42 lbs of semolina-based pasta. Last year durum was selling for $5/bu. That translates to 12 cents per pound of pasta. This year durum is selling for about $20/bu or about 48 cents per pound of pasta.

“Any increase in the price of beer though can hardly be blamed on the price of barley. A bushel of barley yields a bushel of malt, many beers use about a bushel of malt per barrel of beer, (333 bottles). Currently the Canadian Wheat Board (world’s largest exporter) is selling barley at $8.50/bu that works out to about 2.55 cents per bottle of beer. (Last year it sold for half that 1.25 cents per bottle),” wrote McClinton.

For American grain farmers, the numbers sound familiar. They also serve as a reminder that even though farmers around the world compete against each other for international market share to sell their crops, farmers in other places share equal challenges when it comes to what actually is their share of the price tag on food and beverages.


Anonymous said...

Hi I am a small baker in eastern Quebec and i can assure you that to make a loaf or bread you need 60% of wheat flour and since last march 2007 the price of flour went from 11.75 for a 20 kg bag to 27.95 on april the 1st 2008.I agree that speculators have a lot to do with the price of wheat but i think the minister of agriculture should intervine to to regulate wheat price to human consumption.
Thank you
Francois Fleury

Anonymous said...

hi im a flour eater and i learned that in the grocery store that i work in that the consumers buy Self Rising Flour instead of all purpose flour which is rare. but not that we have it on sale for $2.00 a bag people are really buying it. And the flour that im talking about is White Lily its the best flour made in the south. You should pick up a bag and eat some(its really good).

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