New York Times Editorial: The Price of Wheat

New York Times Editorial: The Price of Wheat
Copyright by The New York Times
Published: August 27, 2010
http://www.nytimes.com/2010/08/28/opinion/28sat4.html?th&emc=th


Agricultural experts say they’re not worried about the recent jump in wheat prices, caused largely by the drought in Russia and the ban on Russian wheat exports. The Department of Agriculture is predicting that world wheat production will reach the same level this year — 645 million metric tons — that helped bring prices down from their astonishing $13.50 a bushel peak in February 2008. At present, prices for December wheat are about $6.95 a bushel, down over 50 cents from a month ago, but up nearly 55 percent since early June.

We don’t find the experts consoling. One reason prices have been less volatile is that big grain buyers, like cereal companies, have learned to hedge their buying. And to say that this episode of market volatility is not as bad as the one two years ago — which led to food riots in many parts of the world — is not encouraging.

We’re not supposed to attribute a couple of bad harvests, or the floods in Pakistan, to a changing climate. But this volatility in grain prices was not caused by farmers’ decisions or failures of government policy. It was caused by drought and flood. If this looks like a pattern — or simply a glimpse of things to come — it is worrying.

Canada’s wheat harvest may be off by 36 percent this year, because of too much rain. Australia is unlikely to fill the Russian export gap because it is in the midst of extreme drought. Wheat and corn stockpiles could drop to their lowest since 2008, despite a very good wheat and corn year in the United States. The uncertainty of the grain markets leaves American farmers unsure whether to plant more wheat or not.

The number of humans on this planet forces us to contemplate the limits of the global grain harvest, and to do so while extreme weather imposes its harsh constraints. Then there are new strains of crop disease, like the rust called Ug99, which has blighted African crops.

The fundamental hope is to somehow mitigate or forestall climate change. The experts may be right: the rains may fall — or stop falling — and wheat production may normalize. But the next worrying harvest could be around the corner.