Author Topic: Price of flour going up by 90% in Canada !  (Read 6694 times)

0 Members and 1 Guest are viewing this topic.

Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #20 on: March 05, 2008, 11:12:26 AM »
Craig,

You missed the point.  I'm not talking about fuel costs associated with product movement while in the hands of the farmer.  I'm talking about transportation costs after the farmer sells his products.  That transportation fuel cost will always have some influence in the price offered to farmers for their products.

EDIT: To further clarify...

If I'm buying produce from a farmer, no matter who I am (clearing house, supermarket chain, etc.) I have to worry about how much it's going to cost me to transport that produce to market (retail or wholesale).  My transportation costs affect my bottom line, and since I care about my bottom line, I either offer farmers less for their produce when fuel costs increase, or I charge more at the marketplace.  Either way, product price is influenced by fuel cost.
« Last Edit: March 05, 2008, 11:27:45 AM by November »


Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #21 on: March 05, 2008, 12:17:12 PM »
I didn't miss your point.  I will go on.

The price of wheat is the price that it takes to buy wheat from the producer (farmer).  There is no other reason to refer to "wheat price".  The user (miller) buys wheat from the producer (farmer) without regard to the price of fuel.  The price that he pays is purely on how much supply and how much demand that there is for the product.  He then pays a trucker (independent or union, perhaps his own fleet) to haul the product to his milling facility.  The trucker charges what he can get.  Perhaps it is a set price, perhaps it is by the mile, whatever.  The price paid to haul is independent of the price of wheat, and will be reflected in the price of the milled product.  It is not reflected in the price of wheat.  If there are costs incurred between buying the wheat and milling the wheat those costs are not reflected in the price of wheat.  They are most likely added to the milled product ( the price of flour).  Your theory that the user can somehow pay less for wheat because he has added expense is incorrect.  His added expense of fuel will simply be added to the cost of the milled product.  He has already purchased the wheat as cheap as he can because of supply and demand. 

If the price of oil was reflected in the "wheat price", the wheat price would be low.  It would be low because the user buying the wheat would need to buy wheat "cheap" to cover his added cost of running his mill, his hauling, or whatever. 

I apologize if this thread has moved in an unintended direction.  I just wanted to correct some half correct statements that I was reading.  I am 53 years old, have lived on a farm ( raising wheat) all my life, and have a degree in marketing from a four year institution.  I am not unlearned on the price of wheat.   Craig


Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #22 on: March 05, 2008, 01:01:36 PM »
If the price of oil was reflected in the "wheat price", the wheat price would be low.  It would be low because the user buying the wheat would need to buy wheat "cheap" to cover his added cost of running his mill, his hauling, or whatever. 

Which is almost what I was saying.  You're leaving out one very critical term in my assertion though.  I said that fuel cost influences the price of products.  I did not say it dictates the price of products.  You still don't understand what I'm trying to get across to you, so you might as well drop the "your theory [...] is incorrect" notion.  The supply may be so low or the demand so high that the price offered is still higher than usual, but you would have to live in an economic vacuum to believe that price isn't influenced by fuel cost.  It's the statement, "I stand by my statement that the price of wheat has nothing to do with the price of oil." that forces me to wonder why you think even supply and demand itself can't be influenced by fuel costs.  This is Economics 101.

Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #23 on: March 05, 2008, 01:57:28 PM »
November, I am not going to argue with you out of my respect to your very knowledgeable posts about pizza. 

Jackitup says...

Everyone wants to grow corn for this goofball ethanol scam and no one is growing the other grains, thus the price goes up. Here's a good article on how the grain shortage is affecting the pizza industry 

...end quote.

I know a man who has ownership in the local ethanol plant.  I know that as of this past October, he was diverting some of his corn ground to wheat production.  Not all soil can grow both wheat and corn.  Some soil is not suitable to grow corn because of rainfall, length of season etc. 


Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #24 on: March 05, 2008, 02:13:12 PM »
I don't know what there would be to argue about.  This thread is about the increased price of flour, hence the appropriateness of the following:
However the millers should be figuring fuel costs into the the cost of their flour.
However,

The price of oil has to do with the price of just about everything you buy, including wheat.

... which is completey true.

Aba you lack understanding of how the pricing system in the US is run.

... is flagrant misdirection.  Aba was speaking in general about products in response to the specific topic of flour prices.  I was carrying it further to say why.
« Last Edit: March 05, 2008, 02:15:51 PM by November »

Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #25 on: March 05, 2008, 03:01:44 PM »
... is flagrant misdirection.

Say what?

Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #26 on: March 05, 2008, 03:12:02 PM »
... is flagrant misdirection.

Say what?

Flagrant as in offensive.  Misdirection as in, Aba is talking about fuel cost influence on market prices, and you counter with an explanation applicable only to farmers' prices.  In addition, your explanation still ignores fuel cost influences on even those prices, which are there whether you think you see them or not.  I hope this clears everything up for you.

Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #27 on: March 05, 2008, 03:29:39 PM »
Craig,

What is most bizarre about what you are saying is that it's obvious some wheat crop selection is affected by corn crop ethanol production; so one of the main reasons ethanol is even being considered as a fuel now is because of rising oil prices.  To say "the price of wheat has nothing to do with the price of oil" is simply myopic.

Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #28 on: March 05, 2008, 04:01:21 PM »
quote...
Misdirection as in, Aba is talking about fuel cost influence on market prices, and you counter with an explanation applicable only to farmers' prices...end quote

Maybe you don't know what the wheat price is.  The price of wheat is the price paid to farmers.  There is no other wheat price.  There is no misdirection there.  While the price of oil may have a small influence on virtually anything,  including the election of a president,  the price of oil is not the reason for any long term influence on the price of wheat.  If you are going to narrow your argument to say that oil can influence the price of wheat over a short term(days or a week), I agree. The scare of war affected many segments of our society.  Oil scares have a similar affect.   Such an argument looks as if you are narrowing your approach to win an argument however, because such a narrow interpetation in not what this thread is about.


The quote to open this thread...

While watching the CTV news last night, they reported that the price of flour is going up by 90% in the coming week !
I only caught the last bit of the segment, but they blamed it on the price of oil. ( eh say what ? )  ...end quote

Canadianbacon's reaction was correct... (eh say what?).  It doesn't make since because it is not correct.  The price of flour is high because there is a world wide wheat shortage.  Not because oil is high priced.  

I did no misdirection.

November, as to your last post...The farmer is changing his selection of crops because planting wheat will bring him more money.    It will bring him more money because the price of wheat is high do to a world wide shortage.  Not because the price of oil has anything to do with it.  On some level, you are just not getting the basics of this exchange.   

Producing ethanol has created more demand for raw products that can be made into ethanol.  More demand means that supply that was adequate in the past is not adequate now.  So....higher prices are offered for limited supply.

I apologize for saying that I would not argue with you.  I have lost respect for you because of your lack of respect to me.   


Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #29 on: March 05, 2008, 04:25:47 PM »
November the argument that you are trying to weave is so stretched that it misrepresents the facts.

Your headline...

Dinosaurs die in Ice Age causing a rise in pizza prices. 


Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #30 on: March 05, 2008, 04:45:23 PM »
The price of flour is high because there is a world wide wheat shortage.  Not because oil is high priced.  


Unbelievable.  You still refuse to look at the big picture.  Farmers are switching to biofuel crops because of government subsidies.  Government subsidies are being offered in part because of the price of oil and the desire to become energy independent.  Rather than going off in your own little world with your argument, explain how the following isn't true: Oil price increases lead to government alternate energy incentives which lead to corn based ethanol subsidies which lead to diverting land to corn crops which lead to shortages in wheat which lead to higher wheat prices.  Perhaps you can address that instead of what you obvious misperceive as "the basics of this exchange."  The basics here are that fuel costs have started to make a significant long-term impact on crop supplies, and subsequently crop prices.

Corn Ethanol Subsidies
http://zfacts.com/p/63.html
http://www.slate.com/id/2122961/

Crop Diversion and Pricing
"As more and more fuel ethanol distilleries are built, world grain prices are starting to move up toward their oil-equivalent value in what appears to be the beginning of a long-term rise."
- http://www.earth-policy.org/Updates/2007/Update65.htm

"Yet the most important reason for the price shock is the rich world’s subsidized appetite for biofuels."
- http://www.nytimes.com/2008/03/03/opinion/03mon1.html?hp

This has nothing to do with respect for one another.  This has to do with reality.

Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #31 on: March 05, 2008, 04:48:05 PM »
November the argument that you are trying to weave is so stretched that it misrepresents the facts.

Your headline...

Dinosaurs die in Ice Age causing a rise in pizza prices. 

And your imaginatively ludicrous representation of me is somehow dealing with the facts?!

Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #32 on: March 05, 2008, 05:13:27 PM »
And all of that says that there is increased demand for a product because of a new developing product.  Supply and demand.  Do you still think that flour is high priced because of the high price of oil.  And this all occured in the last in the last 8-9 months.  Unbelievable. 


Offline csacks

  • Registered User
  • Posts: 94
  • It takes some big onions.
Re: Price of flour going up by 90% in Canada !
« Reply #33 on: March 05, 2008, 06:28:18 PM »
This quote from BBC news tells the story.

World wheat stocks are expected to hit a 30-year low this year, partly driven by the worst drought in Australia in 100 years, which halved the winter wheat crop to 12 million tonnes in 2007. ...end of quote

later in the article..."For three years production has been outstripped by consumption and grain stocks are tight."


This snippet is taken from Israel news.  It tells the story of what happened to the US crop.

The U.S. is the biggest wheat exporter and its main cultivation areas are Kansas and Oklahoma.
"The last winter was a terrible one. The ground froze. A week ago the region was swept by rainstorms that turned the ground muddy and impossible to harvest," describes Ron Eichel, the chief international markets strategist at Israel Brokerage & Investments. It's still raining, too and the crops are rotting. Only 9% of the crop is rated as being in excellent condition, the Kansas Agricultural Statistics Service said this week, adding that 37% is in horrible condition.

The American agricultural authorities say that by June 10, Oklahoman farmers had harvested only 25% of the season's production, compared with 76% in the previous year, Eichel says. The average over five years is 45%.

Kansas is in even sorrier state, having harvested only 1% of the crop compared with 13% in the same period of 2006. Why? Because of the unforgiving ground conditions, and the pace at which the wheat is ripening, Eichel explains.

Looking elsewhere, forecasts of a benign winter in Australia were dashed as a drought dried up vast tracts of land, including wheat fields. South-east Asian countries also reported that their wheat crops would be smaller than usual this year.  ...end of quote





If you read nothing other than wheat stocks...thirty year low.  You know the story.  If November wants to throw the dinosaurs in OK.  It all just distorts the story.  When production rises and the price of flour falls next year,  or later this summer, we'll see where oil prices are.   Craig






Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #34 on: March 05, 2008, 06:40:48 PM »
Since you're not saying anything revealing, I won't say anything new.

You're leaving out one very critical term in my assertion though.  I said that fuel cost influences the price of products.  I did not say it dictates the price of products.

Online Pete-zza

  • Lifetime Member
  • Global Moderator
  • *
  • Posts: 21737
  • Location: Texas
  • Always learning
Re: Price of flour going up by 90% in Canada !
« Reply #35 on: March 07, 2008, 07:58:51 PM »

In line with the discussion on pizza prices, an article appeared at the NY Times online, at http://cityroom.blogs.nytimes.com/2008/03/06/mmm-pizza-a-slice-but-at-what-price/index.html, which I have copied and pasted below:

Sharp increases in the price of commodities worldwide, particularly record wheat futures and soaring flour costs, are being felt in a staple of the New York diet: pizza.

Rosalino Mangano, 71, who owns Famous Original Ray’s Pizza, on East Houston Street on the Lower East Side, came from behind the counter to explain that the price of a plain slice climbed to $2.35 from $2 in January and would rise again to $2.55 in the next few weeks — the quickest increase ever, Mr. Mangano said, since his pizza chain was founded in 1964.

Visits to numerous pizza parlors around Manhattan found similar increases, or plans for them, perhaps up to $3 a slice.

Business will take a hit, Mr. Mangano said. Even though a dozen teenagers wearing backpacks clustered at some tables, he added, “They buy maybe two slices, and the rest don’t even buy sodas.”

A few pizzeria owners and managers said they were holding out, waiting to adjust their prices until their rivals make a move. Tony Arias, 67, owner of Rivoli Pizzeria, on Seventh Avenue South in the West Village, described his pricing strategy by saying, “I look around to see what the others are doing first.”

Last year, Mr. Arias raised the price of a slice to $2.25 from $2 — the price it had been for years. It will rise again this month, to $2.50, said Mr. Arias, who has owned the restaurant for 24 years.

A block away is Two Boots To Go West, on West 11th Street, part of a chain, which raised its price to $2.50 from $2.25 for a slice in November; another increase is expected soon, said the manager, Efrain Aquino, 42.

In the old days, Mr. Aquino said, “the biggest overhead was always rent and cheese.” Now, the biggest cost is flour. Last week, he said a 50-pound bag cost $28.50; a year ago, the same bag was $12.

As if to ward off potential competitors, Mr. Aquino said, “If anybody wants to open a pizza shop today, they are going to have to think twice.”

In January, a slice went to $2.25 from $1.75 at Rosario Pizzeria, on Orchard Street on the Lower East Side. By April, it will climb to $2.50, said the store’s manager, Enrico Cicalesa, 58.

But Mr. Cicalesa isn’t surprised, as the cost to fill the tank of his car, which he keeps at his home in Brooklyn, is also going up. “I go last night for gasoline,” he says. “I go again this morning, and it’s 25 cents more.”

At California Pizza Oven, on University Place in Greenwich Village, the cost of a slice went to $2.50 from $2.17 two weeks ago after being unchanged for almost two years. Customers have complained, said Antonio Campos, 35, the manager, “but they know that all prices are going up: the gas, the subways, all of it.”

Speaking of subway fares: The Metropolitan Transportation Authority’s latest subway and bus fare increases took effect on Sunday. Our colleague Clyde Haberman has long noted the Pizza Connection: the theorem that the cost of a slice of pizza runs roughly parallel to the cost of a subway ride. (See Mr. Haberman’s columns on this subject in January 2002, July 2002, June 2005 and July 2007.)

Few pizzerias have resisted the upward movement in prices.

At Pizza Booth, on Bleecker Street in Greenwich Village, the cost of a plain slice will rise to $2.50 from $2.25 later this month. “That might be too much money,” said the manager, Dario Leal, 35. “Let me get back to you when I change the price,” he joked.

At Stromboli Pizza, on St. Marks Place in the East Village, the cost of a cheese slice will rise to $3 from $2.50 by April, according to Joezef Curanaj, the owner for 20 years. Mr. Curanaj is worried because bank branches have been replacing neighborhood bars, which produce a good share of late-night pizza-eaters. “Banks will bring me how much business, two to three customers a day?” he asked.

To be sure, there are some pizza joints that are trying to keep prices down.

One holdout so far is Due Amici, on West 14th Street in Chelsea, a part of a chain. Prices for flour have tripled, said the manager, Loren Tina, 37, so “it’s very, very difficult.” But for now, the cost of a plain slice will stay at $2.50, he said, because “there’s just too much competition from other restaurants around here.”

At La Bellezza, on West 40th Street in the garment district, Besim Karpuzi, 53, the owner, said he feared that he will have to raise the cost of a plain slice to $2.40 or $2.50 from $2.25. “I don’t want it but I’m going to be forced to do it,” he predicted.

Online Pete-zza

  • Lifetime Member
  • Global Moderator
  • *
  • Posts: 21737
  • Location: Texas
  • Always learning
Re: Price of flour going up by 90% in Canada !
« Reply #36 on: March 10, 2008, 10:27:17 AM »
Another article on point, from an investment perspective: http://nymag.com/news/businessfinance/bottomline/44607/.

There Will Be Corn
How to profit from the coming agribusiness boom.
·   By James J. Cramer
·   Published Mar 3, 2008

It took 112 years, but the farmers of this country have finally gotten revenge over the greedy moneymen of Wall Street. In 1896, the greatest orator of his day, William Jennings Bryan, gave what is widely recognized as one of the best political speeches in the history of this nation, lambasting the bankers back east for ignoring the plight of farmers and caring more about the soundness of their money than about the heart and soul of America. Jennings Bryan’s closing words to a cheering throng of delegates at the Democratic convention—“You shall not crucify mankind upon a cross of gold”—put the Great Commoner in the history books, mostly as a coda, an epitaph for what was once an agrarian-dominated society.

Until now. Suddenly, it’s the farmers who are flush, at a time when Wall Street has turned mendicant. Suddenly, those who grow corn and wheat and soy have the upper hand, and it’s all because of a simple irony: This time, the government has decided to crucify mankind upon a cross of ethanol.

Ever since Washington fell in love with this renewable form of energy, Wall Street has been trying to figure out how best to profit from what amounts to a mandate for higher crop prices. It’s so pronounced that, in what has become one of the more horrific bear markets in years, courtesy of the housing and lending debacles, agriculture has become one of the only safe havens for investors. In fact, farmers are benefiting from not just one but two factors: food and fuel.

In normal times, the farmers’ production of wheat, corn, and soy would be bid up simply because of newfound demand from places like China. Throughout history, when a population grows wealthier, you get a pronounced trend away from starch to protein, which calls for dramatically increased corn harvests to feed the cows, pigs, and chickens that produce that protein. But that’s only half the story now. The Bush administration has also mandated a fivefold increase of corn ethanol’s use in this country by 2017, at the same time that the world’s clamoring for our corn. That means as much as 50 percent of our corn will be needed to make ethanol in the next few years, dramatically increasing the price of corn, which has more than doubled from $1.95 a bushel three years ago to $5.47 last week. With farmers switching quickly to corn to benefit from federal subsidies, prices of the remaining major cash crops, soybeans and wheat, have increased from $5.42 and $3.36 a bushel to $14.69 and $11.24 a bushel over that same three-year period. Corn’s plenty has created soy and wheat scarcity, because there are only so many arable acres left in this developed country. The demand is so strong for grain that we have the lowest stocks in decades. The farmers have become the new wildcatters, planting crops everywhere they can, in a rush that feels reminiscent of our nation’s turn-of-the-century oil boom: There Will Be Corn!

In this new world, the parallels to oil and oil drilling are everywhere, and so are the profits. Despite popular myths about spendthrift farmers making do with ancient equipment and old-fashioned methods, nothing could be more wrong. To cash in on the crop boom, the farmers have engaged in spending analogous to any of history’s myriad gold rushes. They have to buy equipment and use new techniques because they can’t buy land. Unless home builders can get a government program to plow down empty houses and turn the vacated land into farms, there is no more land. So here’s how to make money off the flush farmers: Own the stocks of the companies that make the equivalent of their derricks and drill bits, their picks and their pans.

Here you’re in luck. Agribusiness has been so starved for capital, so in the doldrums for decades, that most of the companies that service it have gone under or merged to the point that you’ve got players with little or no competition spewing gigantic, oligopolistic profits. And they’re eager to return their capital to shareholders. In fact, unlike so many other companies that are reeling from the Wall Street–caused credit crisis, the biggest problem facing these ag players is that they have too much cash; they can’t redeploy it fast enough in their own industries, so they are doling out dividends and buying back stock like mad. There are so few of them and they are so treasured for their momentum on Wall Street that their own companies compete every day with the big mutual funds for stock, propelling them to higher levels.

The first, and the most obvious and yet still dramatically undervalued, is Deere & Company, the biggest and best tractor company in the world, with sales and earnings that just blew away even the most optimistic analysts. While Deere’s up 50 percent year over year, it is down 4 percent for 2008, creating a remarkable buying opportunity for this corporation’s stock, the envy of all machinery companies (not just ag machinery makers) worldwide. I think it could go up 50 percent from here and still be too low in valuation. It’s turned into the equivalent of Schlumberger, the greatest oil-service company, with competition that’s almost nil in its field. There were dozens of large tractor companies at one time, but only Deere survived, and it is now prospering.

Farmers need seeds to plant renewable fuels, and they need billions of dollars’ worth of them. Plus they need seeds that produce hardy stalks with corn that has more oil yield than the crops in the old days. Here, Monsanto stands out as an amazing innovator, with patents galore for seeds that can produce much more corn per stalk than could even be imagined ten years ago. Monsanto’s expensive on a per-share basis. And the stock’s not undiscovered; it’s up 100 percent since last summer. But the company just keeps blowing away estimates, and a new corn varietal is about to hit the market that could mean game, set, and match for farmers trying to meet the outrageously aggressive ethanol standards the federal government has passed.

A less risky way to play seeds is to snap up some DuPont, another remarkable seed innovator. You get a snazzy 3.5 percent dividend, better than most bonds after taxes, but you also get stuck with some domestic housing and auto businesses that are handicapping the explosion of agricultural earnings.

Where the biggest money’s being made is perhaps the most dicey business in the world: fertilizers. I say dicey because for so many years the industry’s been plagued by overcapacity. That, however, is history. With farmers desperate to take advantage of these prices, fertilizer’s another key ingredient to bountiful harvests. Two of the best fertilizer companies are PotashCorp of Saskatchewan and Agrium; the first is the lowest-cost producer, the latter is integrated from mine to retail. But my favorite is Mosaic, which has operations globally and can take advantage of the outrageous prices the Chinese are willing to pay for fertilizer.

Finally, there’s the company that has spent millions trying to be sure that its interests are “well represented” in Washington: Archer Daniels Midland, the agricultural processor. With the ag renaissance, this company should be making money hand over fist. So far it hasn’t done much because of managerial snafus, but the environment is so favorable, it’s bound to benefit.

If our government were to show any rational thinking, by the way, we would be making gasoline with soy, not corn. Ethanol is an entirely inefficient method of producing energy, by some estimates consuming almost as much as it generates. It’s a fuel no one really wants. It’s difficult to transport because of its corrosive nature. And subsidizing it is causing runaway food costs and a nasty bout of inflation that’s hitting the poor hardest (soybeans are more efficient as a fuel and easier to produce and distribute). If we came to our senses, Bunge, the soybean company, would be the outfit to bet on. But don’t count on the soybean play; corn’s got too many states’ voters pulling for it.

If the agricultural stocks were simply riding the wave of increased grain use because of worldwide food shortages, that alone would make me bullish on the companies I’ve mentioned. We simply don’t have enough food—or ag stocks—to go around. But the etched-in-stone mandates of ethanol use, no matter how absurd they may be, will ensure at least a half-dozen years of extraordinary returns for these stocks. It’s a rush that puts oil and gold to shame.

James J. Cramer is co-founder of TheStreet.com.

Online Pete-zza

  • Lifetime Member
  • Global Moderator
  • *
  • Posts: 21737
  • Location: Texas
  • Always learning
Re: Price of flour going up by 90% in Canada !
« Reply #37 on: March 10, 2008, 01:47:36 PM »
And, another article, at the New York Times online, at http://www.nytimes.com/2008/03/09/business/worldbusiness/09crop.html?em&ex=1205294400&en=8e4d95e8c98ca590&ei=5087%0A.

March 9, 2008
THE FOOD CHAIN
A Global Need for Grain That Farms Can’t Fill
By DAVID STREITFELD

LAWTON, N.D. — Whatever Dennis Miller decides to plant this year on his 2,760-acre farm, the world needs. Wheat prices have doubled in the last six months. Corn is on a tear. Barley, sunflower seeds, canola and soybeans are all up sharply.

“For once, there’s great reason to be optimistic,” Mr. Miller said.

But the prices that have renewed Mr. Miller’s faith in farming are causing pain far and wide. A tailor in Lagos, Nigeria, named Abel Ojuku said recently that he had been forced to cut back on the bread he and his family love.

“If you wanted to buy three loaves, now you buy one,” Mr. Ojuku said.

Everywhere, the cost of food is rising sharply. Whether the world is in for a long period of continued increases has become one of the most urgent issues in economics.

Many factors are contributing to the rise, but the biggest is runaway demand. In recent years, the world’s developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards.

The high growth rate means hundreds of millions of people are, for the first time, getting access to the basics of life, including a better diet. That jump in demand is helping to drive up the prices of agricultural commodities.

Farmers the world over are producing flat-out. American agricultural exports are expected to increase 23 percent this year to $101 billion, a record. The world’s grain stockpiles have fallen to the lowest levels in decades.

“Everyone wants to eat like an American on this globe,” said Daniel W. Basse of the AgResource Company, a Chicago consultancy. “But if they do, we’re going to need another two or three globes to grow it all.”

In contrast to a run-up in the 1990s, investors this time are betting — as they buy and sell contracts for future delivery of food commodities — that scarcity and high prices will last for years.

If that comes to pass, it is likely to present big problems in managing the American economy. Rising food prices in the United States are already helping to fuel inflation reminiscent of the 1970s.

And the increases could become an even bigger problem overseas. The increases that have already occurred are depriving poor people of food, setting off social unrest and even spurring riots in some countries.

In the long run, the food supply could grow. More land may be pulled into production, and outdated farming methods in some countries may be upgraded. Moreover, rising prices could force more people to cut back. The big question is whether such changes will be enough to bring supply and demand into better balance.

“People are trying to figure out, is this a new era?” said Joseph Glauber, chief economist for the United States Department of Agriculture. “Are prices going to be high forever?”

Competition for Acres

At a moment when much of the country is contemplating recession, farmers are flourishing. The Agriculture Department forecasts that farm income this year will be 50 percent greater than the average of the last 10 years. The flood of money into American agriculture is leading to rising land values and a renewed sense of optimism in rural America.

“All of a sudden farmers are more in control, which is a weird position for them,” said Brian Sorenson of the Northern Crops Institute in Fargo, N.D. “Everyone’s knocking at their door, saying, ‘Grow this, grow that.’ ”

Mr. Miller’s family has worked the Great Plains for more than a century. One afternoon early last month, he turned on the computer in his combination office and laundry room to see what commodity prices were up to.

“Oh, my goodness, look at that,” Mr. Miller said. Barley was $6.40 a bushel, approaching a price that would tempt him to plant more. Soybeans were $12.79 a bushel, up from $8.50 in August.

The frozen earth outside was only a few weeks from coming to life, but Mr. Miller was happily uncertain about what to plant. Last year, the decision was easy for Mr. Miller and everyone else: prices of corn were high because of new government mandates for production of ethanol, a motor fuel. This year, so many crops look like good bets, and there is so little land on which to plant them.

“I’m debating between spring wheat, durum wheat, canola, malting barley, confection sunflowers, oil sunflowers, soybeans, flax and corn,” Mr. Miller said.

The biggest blemish on this winter of joy is that farmers’ own costs are rising rapidly. Expenses for the diesel fuel used to run tractors and combines and for the fertilizer essential to modern agriculture have soared. Mr. Miller does not just want high prices; he needs them to pay his bills.

Until recently, he could expect around $3 a bushel for his wheat — far less than his parents and grandparents received, when inflation is taken into account. Consumption in the United States was dropping as Americans shunned carbohydrates. The export market, while healthy, faced competition.

Now prices have more than tripled, partly because of a drought in Australia and bad harvests elsewhere and also because of unslaked global demand for crackers, bread and noodles. In seven of the last eight years, world wheat consumption has outpaced production. Stockpiles are at their lowest point in decades.

Around the world, wheat is becoming a precious commodity. In Pakistan, thousands of paramilitary troops have been deployed since January to guard trucks carrying wheat and flour. Malaysia, trying to keep its commodities at home, has made it a crime to export flour and other products without a license. Consumer groups in Italy staged a widely publicized (if also widely disregarded) one-day pasta strike last fall.

In the United States, the price of dry pasta has risen 20 percent since October, according to government data. Flour is up 19 percent since last summer. Over all, food and beverage prices are rising 4 percent a year, the fastest pace in nearly two decades.

The American Bakers Association last month took the radical step of suggesting that American exports be curtailed to keep wheat at home, though the group later backed off.

If all this suggests a golden age for American growers, it could well be brief, said Bruce Babcock, an economist at Iowa State University. He predicted that farmers would do their best to ramp up production, possibly to the point of pulling land out of conservation programs so they could plant more. “Give farmers a price incentive, and they’ll produce,” he said.

The Agriculture Department forecasts that world wheat production will increase 8 percent this year. In the United States, spring and durum wheat plantings are expected to rise by two million acres, helping to drive prices down to $7 a bushel, the government said.

Yet the competition among crops for acreage has become so intense that some farmers think the government and analysts like Mr. Babcock are being overly optimistic.

Read Smith, a farmer in St. John, Wash., thinks a new era is at hand for all sorts of crops. “Price spikes have usually been short-lived,” he said. “I think this one is different.”

His example is plain old mustard. Two years ago, Mr. Smith would have been paid less than 15 cents a pound for mustard seeds. As more lucrative crops began supplanting mustard, dealers raised their offering price to 20 cents, then 30 cents, then 48 cents early this year. Mr. Smith gave in, agreeing to convert up to 100 acres of wheat fields to mustard.

Mr. Smith said it was inevitable that supermarket mustard, just like flour, bread and pasta, would become more expensive.

“We’ve lulled the public with cheap food,” he said. “It’s not going to be a steal anymore.”
Bread to Be Had, for a Price

As the newly urbanized and newly affluent seek more protein and more calories, a phenomenon called “diet globalization” is playing out around the world. Demand is growing for pork in Russia, beef in Indonesia and dairy products in Mexico. Rice is giving way to noodles, home-cooked food to fast food.

Though wracked with upheaval for years and with many millions still rooted in poverty, Nigeria has a growing middle class. Median income per person doubled in the first half of this decade, to $560 in 2005. Much of this increase is being spent on food.

Nigeria grows little wheat, but its people have developed a taste for bread, in part because of marketing by American exporters. Between 1995 and 2005, per capita wheat consumption in Nigeria more than tripled, to 44 pounds a year. Bread has been displacing traditional foods like eba, dumplings made from cassava root.

Nigeria’s wheat imports in 2007 were forecast to rise 10 percent more. But demand was also rising in many other places, from Tunisia to Venezuela to India. At the same time, drought and competition from other crops limited supply.

So wheat prices soared, and over the last year, bread prices in Nigeria have jumped about 50 percent.
Amid a public outcry, bakers started making smaller loaves, hoping customers who could not afford to pay more would pay about the same to eat less. Sales have dropped for street hawkers selling loaves. With imports shrinking, mills are running at half capacity.

At Honeywell Flour Mills, one of the largest in Nigeria, executives were glued one recent day to commodity screens. The price of wheat ticked ever upward. “Even when you see a little downturn, you wait for some few hours or a day, and before you know it, it’s gone way up again,” said the production director, Nino Albert Ozara.

Despite the crisis, there is little sense of a permanent retreat from wheat in Nigeria. The mills are increasing their capacity, hoping for a day when supply is sufficient to stabilize prices. “The moment you develop a taste, you are hooked,” said a confident Muyiwa Talabi, director of an American wheat-marketing office in Lagos.

Mr. Ojuku, the man who buys fewer loaves, and one of his fellow tailors in Lagos, Mukala Sule, 39, are trying to adjust to the new era.

“I must eat bread and tea in the morning. Otherwise, I can’t be happy,” Mr. Sule said as he sat on a bench at a roadside cafe a few weeks ago. For a breakfast that includes a small loaf, he pays about $1 a day, twice what the traditional eba would have cost him.

To save a few pennies, he decided to skip butter. The bread was the important thing.

“Even if the price goes up,” Mr. Sule said, “if I have the money, I’ll still buy it.”

Will Connors contributed reporting from Lagos, Nigeria, and Salman Masood from Pakistan.

Offline canadianbacon

  • Registered User
  • Posts: 1041
  • Age: 49
  • DoughBoy
Re: Price of flour going up by 90% in Canada !
« Reply #38 on: April 02, 2008, 04:30:28 PM »
Price updates - Costco. [ Canadian dollars ]

April 1, 2008

20 kg bag of flour --> $21.79
10 kg bag of flour --> $10.39

Pizzamaker, Rib Smoker, HomeBrewer, there's not enough time for a real job.

Offline November

  • Registered User
  • Posts: 1877
  • Location: North America
  • Come for the food. Stay for the science.
    • Uncle Salmon
Re: Price of flour going up by 90% in Canada !
« Reply #39 on: April 12, 2008, 04:46:14 PM »
I'm sure the region where I live will not be immune forever, but the supermarket (retail) flour prices around here haven't budged at all recently.  King Arthur Bread flour is $2.99 for 5#, and Eagle Mills All-Purpose flour is $2.19 for 5#.  I did purchase about 20# of each just in case though.

As of this week:

$4.29 King Arthur Bread flour
$2.49 Eagle Mills All-Purpose flour


 

pizzapan