The world’s grain situation is critical

The price of grain on world markets is climbing dramatically. The situation has been affected by the great increase in the use of wheat as food, whilst at the same time there have been production problems in many parts of the world.

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Portrettbilde av Einar Risvik
Einar Risvik

Senior Scientist
Phone: +47 913 74 880

Stocks of wheat are now lower than they were during the second world war and there is no sign of any forthcoming improvement. Just the opposite in fact, we already know that production increases in 2008 will be less than half the increase in demand.

Wheat affects other types of grain

What makes the situation rather interesting is that wheat is in many ways the backbone of the food market. The prices of almost all other kinds of food are connected with wheat and are affected when the price of wheat goes up. We can see this directly in everything that is dependent on feed concentrates – meat and dairy products in other words – and indirectly in everything that can be used instead of wheat, such as maize, rice, pulses and other types of grain. The general rise in the commodities markets also encourages producers of other raw materials to also raise their prices: so the price of coffee, sugar and vegetables also goes up.

Many countries affected

The consequence is a major price rise, large enough to start to create social unrest in the poorest countries. The website of the communist party of China states that the price rise for wheat alone exceeds the average family’s food budget. In the Bangladesh and Pakistan elections, the price of bread was a key factor for people choosing which way to vote. In Kenya the price of food has been a significant factor in the unrest that has marked the country recently and unrest was triggered in Manila after the price of rice doubled in four years. When a shortage of one commodity occurs, what happens is a substitution effect that leads to shortages of other commodities that can be used instead, starting a chain reaction that sets all prices rising.

Norway doesn’t notice the problem

For rich countries like ours this isn’t a problem, particularly not for Norway which has an agricultural agreement that ensures lower prices for us in world markets at the moment. For the first time it is Norwegian raw materials that are cheapest, which works in favour of the world’s richest consumer: the Norwegian. This reduces pressure on prices in Norway, the only country in the world for which this is true right now. Because we have so much money that the weekly food budget is not a significant part of family finances, we see this as a bagatelle. Large parts of the world have to take it in deadly earnest, more so than we might have realised and perhaps more than we are willing to admit. Food prices have become a very important factor in the conflict between rich and poor, and the situation is accelerating fast.

Obesity versus poverty

In our overweight western world, we import raw materials in large quantities however. In Norway we grow 70 to 80 per cent of the wheat we eat ourselves, but the rest comes from the world market, perhaps from the very countries that are suffering shortages. To put it bluntly, we could say we are taking food out of the mouths of those who don’t have enough, because we have money and they don’t.

The paradox is that, from a nutritional point of view, wheat and rice are far from ideal foods. In a world in which overeating is a much greater problem than lack of food, it would actually not be such a bad idea if many people went over to a diet containing less wheat, rice and maize and more of the slow-acting carbohydrates that we currently find in animal feeds, that is to say rye, oats and barley. Knowing what we do today, we can actually state that there would be significant health benefits for the population if we replaced the imported wheat, rice and maize in our diet with rye, oats and barley. What that means in terms of quantity is about 20% of our consumption of bakery goods – something that isn’t that hard to achieve. In addition to this there is potential for whole grains as a rice substitute, while pasta could easily be replaced with noodles made of the grains we are currently feeding to animals.

Through environmental eyes

The word sustainability could also be a topic for much discussion here, because transport is not free. The environmental gains are also indisputable and with over 40% of all CO2 emissions linked to food and food production, perhaps this might also be a factor in favour. The arguments are already on our side, so these can be left as added factors for later consideration.

In other words we can benefit all round from eating our own grain instead of importing. A change in consumer habits would also be helpful in lessening pressure on the commodities most in demand, because at the moment there is no shortage, it is the fear of future shortage that is driving prices up. So reduced demand would reduce the pressure on prices. Even if prices in Norway went up to world market levels, these alternative grains would always be cheaper than wheat and rice, which are the most expensive. In fact a doubling of price would in relative terms make Norwegian barley, rye and oats even cheaper compared with the nutritionally poorer alternative, wheat. What are we dawdling for? There are benefits here for environment, nutrition and health, at a cheaper price and with a clearer conscience about taking food out of the mouths of poor people.

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