Wheat Prices & Crisis

Thursday, 24 October, 2013

A major land occupier – wheat – is entering the stage as planting season begins in the Northern Hemisphere, and the harvest coming in the South, Australia in particular. The instruments are going haywire, with some people predicting a dire crop in Oz, a bountiful harvest in the UK next year, and a government induced destruction of the Argentine wheat industry reported today.

The wheat story reflects an increased volatility in the food market, which itself reflects increased climate and market volatility. The ultimate ramification has been massive land procurement across the world (Africa in particular) in an attempt to reduce the instability and guarantee a secure source of fertile land. The report on Argentina’s desertification raises worries about the sustainability of large scale commercial monoculture farming, which ought to be another factor in the overall volatility of food.

Food riots are becoming increasingly incidental with increasing prices. In the past 15 years, wheat prices have nearly trebled; jumping way ahead of income, which have been stagnant and declining in much of the world. Many other basic staples have had large price increases too, and a BBC report yesterday on Onion price increases in India creating political ripples, demonstrates the influence of the volatile food market.

Are we seeing is the emergence of a proper private sector global food economy much like the rest of the commodities industry? Will there will be exploration companies seeking out the best soil, best suited for certain crops, with development and production phase companies growing these food commodities, with major companies ultimately taking them over?

What is interesting to see however, is how little the agri-commodity companies look like the rest of the commodities industry. Mining companies have a degree of ‘glamour’ when compared to agribusiness, we’ve all heard of Rio Tinto, BHP, etc. and their dastardly ways from the NGOs, but they do have a correspondingly sophisticated and functional public arm. Yet agri-commodities lurk in the shadows, with budget websites and minimal CSR or public engagement. How many Agri-commodities companies can we name? Is this not extremely bizarre when they currently occupy considerably more land than miners, and are projected to own the swathes of the privatized Earth?