Why Bread Costs So Much

#1
Everyone who remembers the story of Joseph and the Pharoah will know that there are good years and bad years for growing crops. In good years crops (foodstuffs/commodities) are abundant, there are surpluses, prices come down. In bad years they are scarce, prices go up.
Historically, Commodity Traders bet on the outcomes. Then there was financial deregulation and commodity futures began to look attractive to the big players, the managers of hedge and pension funds. When property and other financial markets fell out of orbit, foodstuffs began to look really attractive.

Food prices are at their highest level on record, according to the UN's Food and Agriculture Organization (FAO).

It tracks the wholesale cost of major foods such as sugar, meat and cereals, and says that prices last month were higher than their peak in 2008, when a food crisis prompted riots and demonstrations around the world.

The FAO was keen to say that we are not in the midst of another emergency, but as recent demonstrations in Tunisia and Algeria have been linked to higher food prices, alarm bells are ringing once again.

What's more, oil prices are also edging up, reaching their highest level in two years.

Following the 2008 peaks, good harvests for most basic foods helped prices to fall back.

But in 2010, severe weather in some of the world's biggest food exporting countries damaged supplies.

That helped to push food prices almost 20% higher than a year earlier, according to the FAO. (The 2010 figure was slightly below the annual measure for 2008 as a whole.)

Flooding hit the planting season in Canada, and destroyed crops of wheat and sugar cane in Australia.

In addition, drought and fires devastated harvests of wheat and other grains in Russia and the surrounding region during the summer, prompting Russia to ban exports.

As a result, wheat production is expected to be lower this year than in the last two years, according to US government estimates.

It will still be the third largest on record, but crucially, it is expected lag behind the growing demand for food, which is another key factor pushing up prices.

Have the prices of all foods gone up? The picture is mixed.

Rice, which is a staple in many Asian countries, hasn't risen by as much as other commodities because a record harvest is expected this year.

In addition, some countries which don't rely on supplies from disaster-hit exporters haven't experienced the same price squeeze.

Prices of maize in East Africa, for example, where it is the most important food crop, have fallen by up to 50% following bumper harvests.

There have also been more localised weather problems. They have received less coverage - but are no less important to farmers and consumers in those areas.

In Central America, lack of rain has damaged bean crops and caused the biggest individual price rises, according to a recent FAO report.

The price of red beans, part of the staple diet in the region, has almost trebled in the past year in El Salvador and Honduras.

The FAO says speculators who trade commodities on the financial markets are not to blame for the huge rise in prices, but they have made matters worse.

Take sugar for example. Production has failed to keep up with the growing demand coming from developing countries, pushing prices sharply higher.

But the Economist Intelligence Unit also points to the role of speculators, who spotted the situation as an investment opportunity and "helped exaggerate" the price rallies.

The World Development Movement (WDM) is keen to curb this betting on prices.

It wants greater regulation of the buying and selling of futures contracts - which are an agreement to sell a commodity at a certain price at a set time.

These were created to reduce uncertainty as the producer has a guaranteed price and the buyer secures the goods they need. It is effectively a way for both sides to reduce the risk of doing business.

But the WDM and others think that trading these contracts like stocks and shares is pushing food prices even higher to the detriment of the poorest people.

And what's happening to the price of oil? The price of a barrel of oil is approaching $100 on the London market. At about $98, it is at its highest level for two years.

Like food, the increase is a combination of the impact of supply problems, interest from investors and rising demand. Analysts point in particular to the thirst from China for energy to fuel its factories and power thousands of new cars.

And also like food - it is difficult to escape the impact of the rising price of oil.

It not only directly affects the cost of fuel and energy, but also feeds into the prices of other goods by raising the cost of production and transportation.

As many economies around the world struggle to recover from a painful global recession, wages aren't rising to keep pace. So many are really feeling the squeeze.
See link for full article and charts: BBC News - Q&A: Why food prices and fuel costs are going up

Then listen to this article: BBC - BBC Radio 4 Programmes - Face the Facts, Feeding Frenzy
 
#3
I think the fuel price thing, which certainly is key ingredient to the price of foods like bread, won't go through the roof, certainly as far as we in the West are concerned anyway.

But we've already seen the damage that can be wrought by rabid financial trading so I believe that
letting the World's traders treat the food market as just another source of gambling chips will inevitably lead to proper trouble.

With the fuel, the main suppliers, particularly the Arab countries, are not stupid and they see the correlation between the price of oil
and the amount of cash that flows into the search for alternative energy sources and the increasing fuel efficiency of existing technologies.

There is, I believe, a saying in the oil industry that 'The Stoneage didn't end because the World ran out of stone'. So they will
be very careful not to trash their own market by diminishing it or encouraging the equivalent of a new Bronze Age.

I think oil is still cheap, it's just the greedy ******* who keep piling tax onto it that make it expensive.
 
#4
Reminds me of the old Cold War when the most vital snippet of intel was what would be the Soviet grain harvest that year. Good harvest, sleep tight, indifferent, keep an eye on things, bad harvest, things could get spicy and if the harvest failed - here come the Fantasians
 
#5
I havnt really noticed that bread is particularly expensive.
In fact, Morrisons have been selling wholemeal loaves for 50p almost constantly for the last few months. I dont recall the brand (Not own brand) but it tastes fine for my sandwiches.

And anyway, are we not supposed to be in the middle of an "obesity crisis" in the "west". A bit less food might be good for the fat and idle workshy class.
 
#7
I havnt really noticed that bread is particularly expensive.
In fact, Morrisons have been selling wholemeal loaves for 50p almost constantly for the last few months. I dont recall the brand (Not own brand) but it tastes fine for my sandwiches.

And anyway, are we not supposed to be in the middle of an "obesity crisis" in the "west". A bit less food might be good for the fat and idle workshy class.
It's far cheaper to eat unhealthly, any processed food is cheap for a reason. Think on.
 
B

bokkatankie

Guest
#8
But we've already seen the damage that can be wrought by rabid financial trading so I believe that
letting the World's traders treat the food market as just another source of gambling chips will inevitably lead to proper trouble.

.
The agricultural futures market is the oldest market in the world (for a fuller explanation watch Trading Places). Agricultual produce, as a commodity, is in the hands of exactly the same people that buggered up the banks. Short memories have already blotted out the expotential rise in the these commodities in early 2008 (at the same time oil was $140 a barrel, $92 today). That was the warning shot in what will become the next bubble but unlike expensive houses (that were regarded as an unending provider of cheap equity based credit), people need food and with an ever expanding global population food and all other types of commodities will become the plaything of the markets. You only need to look to Africa to see how China, Saudi Arabia, etc. are buying up agricultural land and commodities at a frightening pace.
 
#10
"It's far cheaper to eat unhealthly, any processed food is cheap for a reason. Think on."

A myth invented to excuse the fat, idle and unemployed.

I am as tight fisted as a Scots/yorkshire cross and deliberately minimise my food budget yet manage to eat a healthy, low fat and nutricious diet.
Unhealthy food is not cheaper. For example, tube of pringles - almost £2, average loaf of good quality wholemeal multigrain bread - less than £2. In fact, sticking to bread, there is generally no significant price difference between white bread and wholemeal. Despite which, Chav mong single muvver of 6 is almost guaranteed to feed her illegitimate brood white bread.

It is easier to eat crap (and easier for a bad parent to get her kids to eat it) though which explains why the long term unemployed are also likely to be fat. If you are too idle to get a job you are almost certain to be too idle to prepare fresh healthy food or spend the time and effort to convince your kids to eat it.
 
#11
The agricultural futures market is the oldest market in the world (for a fuller explanation watch Trading Places). Agricultual produce, as a commodity, is in the hands of exactly the same people that buggered up the banks. Short memories have already blotted out the expotential rise in the these commodities in early 2008 (at the same time oil was $140 a barrel, $92 today). That was the warning shot in what will become the next bubble but unlike expensive houses (that were regarded as an unending provider of cheap equity based credit), people need food and with an ever expanding global population food and all other types of commodities will become the plaything of the markets. You only need to look to Africa to see how China, Saudi Arabia, etc. are buying up agricultural land and commodities at a frightening pace.
$92 ???? no its not, it's about $98.50 and its going to keep going up
 
B

bokkatankie

Guest
#12
$92 ???? no its not, it's about $98.50 and its going to keep going up
ICE Brent Crude: $98.40
NYMEX WTI Crude: $92.16
ICE WTI Crude: $92.14

But totally agree, this and all other commodities will continue to rise in price as we see economic recovery, reported today that the world is "short" 435,000 tonnes of copper, good buy?
 
#13
"It's far cheaper to eat unhealthly, any processed food is cheap for a reason. Think on."

A myth invented to excuse the fat, idle and unemployed.

I am as tight fisted as a Scots/yorkshire cross and deliberately minimise my food budget yet manage to eat a healthy, low fat and nutricious diet.
Unhealthy food is not cheaper. For example, tube of pringles - almost £2, average loaf of good quality wholemeal multigrain bread - less than £2. In fact, sticking to bread, there is generally no significant price difference between white bread and wholemeal. Despite which, Chav mong single muvver of 6 is almost guaranteed to feed her illegitimate brood white bread.

It is easier to eat crap (and easier for a bad parent to get her kids to eat it) though which explains why the long term unemployed are also likely to be fat. If you are too idle to get a job you are almost certain to be too idle to prepare fresh healthy food or spend the time and effort to convince your kids to eat it.
That's why Mum's go to Iceland! Cost of a plate of chips pence, cost of a plate of salad £'s for all the free range organic shite.
 
#14
Henry Kissinger once said "Control oil and you control nations; control food and you control the people."

Are we still making "bio-fuel" from cereal crops?
 
#15
Llech,

You dont have to go to the free-range, organic, extreme to eat well. You just need to make sensible choices. Contrary to popular belief, food at iceland is not particularly cost effective.

I recon I can feed an adult human being healthy food sourced from a high street supermarket for £10 a week or less. It gets easier if there is more than one.

My personal average spend on food per week is somewhere in the order of £40 (or less) for two adults and the most expensive items are usually the ones that are least healthy and least neccesary!
 
#16
VM,

I believe that, in the US at least, biofuel is one of the most significant contributors to pressure on cereal crop prices.
 
#17
Llech,

You dont have to go to the free-range, organic, extreme to eat well. You just need to make sensible choices. Contrary to popular belief, food at iceland is not particularly cost effective.

I recon I can feed an adult human being healthy food sourced from a high street supermarket for £10 a week or less. It gets easier if there is more than one.

My personal average spend on food per week is somewhere in the order of £40 (or less) for two adults and the most expensive items are usually the ones that are least healthy and least neccesary!
Agreed. Though in our case its Euro 50 per week, but that does include wine.
 
#18
Henry Kissinger once said "Control oil and you control nations; control food and you control the people."

Are we still making "bio-fuel" from cereal crops?



Yes, large swathes of the 3rd world are now being turned over to growing crops to make bio-fuel and having to import food to feed their populations.

As an instrument of control, its beautiful in its simplicity and effectiveness.

Poor countries growing bio fuel crops to allow the US to have cheap gasoline. Poor countries then have to import food from one of the worlds biggest agro-exporters,the USA to feed their people. This food is paid for out of the revenues received from the USA to purchase the bio fuel crops.

You control the country, the people AND you get your money back!
 
#19
I may have to seriously think about turning even more of my garden over to produce. I've got a freezer full of runner beans, cane fruit and peas but last years crop of spuds only lasted me till last week. All I have left growing at the moment is ps broccolli and leeks. I rarely buy fruit and veg and with costs increasing another couple of growing plots are in order.
 

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