The very thought of America,
the land of amber waves of grain, facing a wheat shortage is almost
un-American.
However, over the last two years a series of events has converged to
weaken
global food security. America is being asked to export wheat at rates
that are
drawing down domestic stocks to levels described by U.S. Wheat
Associates, the
nation’s wheat exporting trade group, as “bin bottoms.”
Despite record-breaking wheat
prices, U.S. wheat exports are up over 60% from last year. This is
creating a
very tight supply situation in the United States, precipitating
unprecedented
prices for flour and wheat. The low value of the American dollar,
relative to
other major currencies, has made American wheat attractive and has
contributed
to the requests from other countries knocking at America’s doors for
wheat.
In a nutshell, global demand
for wheat is outpacing global production capacity. Global wheat
production for
the year ending June 30, 2008 is estimated at 604 million metric tons
(MMT).
Consumption for the same period is estimated at 619 MMT, creating a
shortfall
of 15 MMT. The year before was even worse, with production at 593 MMT
and
consumption at 616 MMT, a shortfall of 23 MMT. Back-to-back shortfalls
in wheat
production and dwindling stocks to 30-year lows are converging at a
time when
demand is robustly increasing.
So as Americans enjoy their favorite
breads, pastas and pastries, the price is on the way up as the baking
industry
adjusts to wheat price shocks. According to the U.S. Department of
Agriculture,
the price of a bushel of wheat in February 2007 was $4.71, which rose to
$10.40 in February 2008 — a
220% increase. A bushel of durum wheat, used for pastas, cost $16.40 in
February 2008, up from $5.16 the year before — a 317% increase. What’s
more,
the nation’s supply of rye is now exhausted and bakers must import rye
from
Germany and the Netherlands.
As record-high prices squeeze
margins for bakers, America’s baking industry staged a major
food-related
demonstration — the “Band of Bakers March on Washington.” On March 12,
the American Baking
Association (ABA) expected more than 50 of the nation’s largest baking
companies to march on Washington, D.C. The demonstrators planned to
hold a
press conference and meet with Congressional leaders, agriculture
secretary Ed
Shafer and White House staff.
The ABA’s first goal is to
persuade the government to establish a policy that balances domestic
supplies
of wheat with export demands. Second, the bakers would like U.S.
officials to
rethink
the government’s biofuel
policies, since the diversion of corn for ethanol production is
impacting food
security at home and abroad. Third, the ABA argues that
non-environmentally
sensitive acreage should be removed from the popular Conservation
Reserve
Program and put back into farming production.
The big question for 2008
will be whether wheat-growing acreage will increase domestically, at a
time
when three other major crops — corn, soybeans and hay — also command
historically high prices. It is uncertain which crops will come out on
top in
this unprecedented competition for farm acres.
Benjamin Gisin writes and
lectures extensively on the promise of local food systems, agricultural
sustainability and food security. For more information, visit Touch the
Soil
magazine: www.touchthesoil.com.
