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Why wheat shot up 30% in 3 weeks

Sarit Menahem, Haaretz (Israel)
The price of wheat shot up 30% in less than a month, to a 12-year high of around $420 to around $600 for 5,000 bushels. Now, wheat is a main component of the cost of flour (90% in Israel). Therefore the spike in its price means that the cost of bread is about to rise.

In Israel, the prices of basic breads are regulated by the Ministry of Industry and Trade. But you can expect the price of bakery or specialty breads to climb, and by a lot, to compensate for losses on regulated bread.

The spike in wheat is a hot-button topic on the global agenda. What happened?

Experts say that the global stockpile of wheat has fallen to its lowest level in 26 years. Global warming is changing weather patterns. Harvests are down and in parallel, the explosive economic growth in China has increased consumption of “western items”, and guess what, that includes wheat.

Some also blame speculators, hedge funds specifically, for increasing the volatility of commodity futures.

When it comes to agricultural commodities, you can’t ignore the effect of global warming. The weather is changing. Floods and droughts are not good for crops.

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.

…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.

As for China, not only are tastes westernizing, but it’s undergoing a process of urbanization, which is reducing the agricultural sector. China had been practically self-sufficient, says Gideon Ben-Noon, CEO of the Shekel Group. Demand has risen while internal supply has dwindled, forcing China to import agricultural products.

…Meanwhile, seeing peak oil either coming, here or already past, the world is hungrily eyeing ethanol as a future source of energy. Ethanol is prepared mainly from cane sugar, soy beans and corn. Thing is, that as the demand for ethanol soars, more land is devoted to growing those three at the expense of other staples, such as – yes, wheat.

Also, as corn disappears from the table in favor of the car, people eat more wheat, again jacking up the price.
(21 June 2007)

Britain’s Environment Agency: Go Vegetarian to Stop Climate Change

Bruce Friedrich, Common Dreams
…an official with the UK’s Environment Agency has acknowledged that humans can significantly help stop global warming by adopting a vegetarian diet.

Of course, the science could not be more clear. When U.N. scientists looked at all the evidence, they declared in a 408-page report titled Livestock’s Long Shadow that raising animals for food is responsible for more greenhouse gases than all vehicles in the world combined. And scientists at the University of Chicago showed that a typical American meat-eater is responsible for nearly 1.5 tons more carbon dioxide a year than a vegan.

But for someone in government to admit this is something special, since even Al Gore refuses to talk about it (which makes me think that perhaps he is planning to run). What happened is that someone posted a comment on the Environment Agency’s Web site asking, “Adopting a vegan diet reduces one person’s impact on the environment even more than giving up their car or forgoing several plane trips a year! Why aren’t you promoting this message as part of your [World Environment Day] campaign?”

In response, an Environment Agency official wrote that the “potential benefit of a vegan diet in terms of climate impact could be very significant” and offered assurances that the Department of Environment, Food and Rural Affairs is working on a set of “key environmental behaviour changes” to mitigate climate change—including promoting vegetarianism.

Indeed, study after study has shown that animal agriculture contributes to global warming and environmental destruction, yet instead of urging people to go vegetarian, most U.S. politicians and environmental spokespeople just continue to hype hybrid cars, recycling, and fluorescent light bulbs as solutions to our spiraling environmental problems.

This is just not good enough. Vegetarians in Hummers do more for the planet than do meat-eaters who cruise around in hybrids or collect recyclable soda cans. Now that George Bush has finally acknowledged that global warming is a reality, perhaps he could follow his vegetarian niece, Lauren Bush—and former first daughter Chelsea Clinton—in adopting a vegetarian diet. I’m not going to hold my breath until this happens, but it would be gratifying for representatives of the U.S. government to acknowledge the absolute fact that what people eat is more important than what they drive.

Carbon dioxide emissions aren’t our only environmental concern, of course. There’s deforestation, water and air pollution, world hunger, and more. According to Greenpeace, chickens raised for KFC and other companies that “produce” chicken flesh are fed crops that are grown in the Amazon rain forest. And according to the U.N. report, raising animals for food is “one of the top two or three most significant contributors to the most serious environmental problems, at every scale from local to global.”

To whit, more than 260 million acres of U.S. forest have been cleared to create cropland to grow grain to feed farmed animals; farmed animals are fed more than 70 percent of the corn, wheat, and other grains grown in the U.S.; and almost half of the water and 80 percent of the agricultural land in the U.S. are used to raise animals for food.
(20 June 2007)

Mexican farmers replace tequila plant with corn

Sara Miller Llana, Christian Science Monitor
Ethanol demand has doubled corn prices, making it more profitable than agave.
…about one-quarter of those who grow agave, which is used in the production of tequila, are expected to burn their fields to make way for corn, as prices have nearly doubled from what they were a year ago, due to US ethanol demand.

Agave is not the only casualty of the corn-based ethanol craze. Mexican beans, potatoes, rice, and barley have all been mowed over for corn, a crop whose origins reside in ancient Mexican lore but has long been associated with poverty: corn farmers who can’t compete and head north, Mexicans who can afford nothing but.

“There is a lot of enthusiasm for corn across the country,” says Carlos Salazar, secretary general of the National Confederation of Mexican Corn Growers. Prices are up 80 percent, from 2006 to 2007. By the end of this year, he says, 2.5 million more tons of corn will be planted.

In April, Mexico’s Congress passed a law for cleaner-burning ethanol to oxygenate gasoline in Mexico City, Monterrey, and Guadalajara.
(21 June 2007)