WHILE wheat prices have been strengthening, the world price of rice has doubled. While prairie producers are seeing better incomes, there have been food riots in Egypt and Somalia where rice is in short supply.Â
These two developments are related. We need to pay attention.Â
The United Nations Food and Agriculture Organization has expressed “an increasing concern about current rice production practices meeting demands, contributing effectively to rural poverty, alleviating and minimizing environmental degradation.
“Rice is the world’s most important staple food crop…. More than half the world’s population relies on rice as the major daily source of calories and protein.”
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New varieties with significant yield increases are not coming because governments are not investing in research.
The available land for rice production is virtually all in use. There has been little investment in improved irrigation and developing better farming practices, so salinity is becoming a major problem, as are water-related diseases.
The interesting thing is that the report from which I am quoting was written in 2002. Those problems have only become worse since then.
A global rice shortage has pushed prices to record levels. Rice was trading last October on the Chicago Board of Trade for $11.40 per hundred pounds.
It has been trading at $20.20 this month. The latter is well beyond the ability of many people to buy; hence reports of food riots and hoarding.
Even Canadian consumers will feel the effect of rising rice prices.
The good news for wheat produces is that prices are high and demand is strong for a variety of reasons. Those prices are reflected in the price of bread.
In Saskatoon, the cost of a loaf of bread has risen from around $4 last fall to nearly $5 this spring. There are suggestions the prices will go higher.
These prices have not sparked food riots, nor are they likely to do so – at least not in Saskatoon and not now. But they point to a larger problem of costs rising higher and faster than incomes.
We have seen that with hyperinflation in the housing market to the point that even middle-income people are having trouble getting homes.Â
People need to have enough income to eat. If not, there are problems. A wage of $12 per hour, before taxes, for full-time work leaves people in poverty. It isn’t until family incomes reach almost $17 an hour for full time work that there begins to be a reasonable level of economic comfort.
What if wheat prices rise to the point where people cannot afford bread? We could face the same economic instability that many other countries are facing. And economic instability leads to political instability.Â
Widespread political instability would interfere with normal trade and normal international relations. We don’t want to see that.Â
Higher wheat prices are good but they can cause problems.
