Posted on 09/08/2007 1:34:28 AM PDT by CarrotAndStick
WASHINGTON: Forget the import of jet fighters and uranium for the moment. It’s India’s purchase of wheat in the international market that is attracting world attention — besides domestic controversy.
A massive purchase of nearly 800,000 tonnes of wheat by India at record prices earlier this week has added to what agricultural experts are calling the great wheat panic of 2007. Wheat prices had already reached record levels ahead of the Indian move, thanks to falling or stagnating production in many countries — blamed on poor weather and crop diversion — and growing population.
Now, prices are going through the roof. In fact, India’s transaction was almost stratospheric.
New Delhi is reported to have paid $10.64 per bushel — inclusive of transportation costs — in the latest transaction, compared to the current market price of below $9. Evidently, the grain market cranked up the price to meet India’s ‘must-buy-to-build-buffer-stock’ policy.
On Wednesday, futures price of wheat hit what was described as a record high of $8.86 per bushel on the Chicago Board of Trade. That’s still more than double the September 2006 price of $4.22 a bushel, and a 60% rice this year alone, according to CBOT officials.
The trigger event which has pushed the world wheat trade into "full-panic mode" is the unexpectedly large purchase by India of 7,95,000 metric tonne of wheat, says Mike Woolverton, a professor of agricultural economics at the Kansas State University.
Egypt and Iraq have also made large purchases in recent days, adding to price pressure at a time when global stocks are at a 30-year low. On the face of it though, India is an unlikely wheat importer. As the world’s second largest wheat producer at around 75 million metric tonne annually (behind China’s 96 million metric tonne), it is widely perceived to be self-sufficient in food production.
But India’s past experience with shortages has also engendered a food security paradigm that mandates the government to build and maintain a buffer stock of grain. Food production has also not grown in tune with the burgeoning population, now at 1.15 billion.
As a result, major wheat exporters such as US (around 60 million metric tonne annually), Canada and Australia (25 million metric tonne each) have come into play. Coincidentally, all three are major voices in the nuclear suppliers cartel. The wheat crisis, in addition to similar squeeze in food products such as corn and milk in some countries, is so severe that the UN has warned of impending food-related social tensions and political upheaval.
Jacques Diouf, director-general of the UN’s Food and Agriculture Organisation, told the Financial Times this week that surging prices for basic food imports such as wheat, corn and milk had the "potential for social tension, leading to social reactions and eventually even political problems."
Diouf said food prices would continue to rise because of a mix of strong demand from developing countries; a rising global population, more frequent floods and droughts caused by climate change; and the biofuel industry’s appetite for grains.
Definitions of tonne on the Web:
Metric ton (1,000 kilograms or 2,204.62 pounds).
A tonne or metric tonne is about 10% greater in weight than a short ton and equivalent in weight to 1000 kilograms or 2,205 pounds.
I’m watching with interest to see how many people in the third world will starve in the coming years as a result of the ethanol scam. I view it as another in a long line of idiotic government schemes that have resulted in tens of millions dying.
DDT, and Chinas ‘great leap forward’ being two of the most devastating ideas implemented.
When wheat prices double(or as I believe ultimately increase many times over), its an inconvenience for people in the first world. We consume less of optional things, maybe wait longer to buy a new car.. or in the worst case situation fail to make the mortgage payments.
For people already malnourished doubling the price of food, may push them into starvation as they only can then consume half as much. Now imagine food increasing by ten times in price.
You might want to add Stalin's collectivism too. Millions starved in the 20s and 30s in Russia. I guess thatis where Mao got his idea.
There is an issue in the beer industry already I think concerning hops growing. I can’t remember exactly what the issue is, but it a looming problem for the major beer growers in a few years and will be devastating to the small breweries.
Oh, thats right. Africa trashed food production to line the pockets of dictators and thugs.
Best to live where they produce it rather than where they don’t.
I am not sure that ethanol is the sole reason. There is a world-wide shortage of grains, therefore a rise in prices, and it is about to get worse.
It seems to be drought, and also the significant away from farming in recent decades.
In Australia, the wheat crop is down again, falling again, because we are caught up in a drought. The sugar producing regions in Queensland do make ethanol, but one can’t grow grains in the tropics, so it doesn’t matter.
I’m wondering where FSU is , and don’t tell me Tallahasee.
Me too.
Good point.. I think I'd file Soviet crop underproduction under Lysenkoism. But in fairness there was more to it, like collectivizing farming.
You are right.. sounds like droughts lowering crop production in at least one major producer. And the long predicted push of some of the big developing countries to meat consumption is finally happening.
Where I live it was a cool year as well temperature wise. I'm not sure the impact of that but I'm assuming it would lower production.
Also oil is already such an important part of food with the fertilizer.. and that fertilizer must be getting more expensive, as oil and gas rise in price.
“A measure of wheat for a penny, and three measures of barley for a penny”
Maybe its time to get long barley.
They're going to starve because they have corrupt governments.
Trying to make us feel guilt just because we are the most successful country in the history of the entire world. We are so successful in fact that we can BURN our food stuffs. That's something to celebrate.
You are trying to do something the Liberals are much more successful at. Give it up, you'll NEVER be as successful at the guilt trip business as the Libs.
Let the rest of the world begin to starve.
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