wheat prices: Image of price chat for European milling wheat, from Jan 2017 to Aug 2018

Wheat prices and food stability in developing economies

Wheat prices have increased sharply over the past few months and are expected to continue to rise for the foreseeable future.

Wheat prices are rising

Why?

There seem to be two main reasons: wheat output has fallen, and global supply chain disruptions.

This is good news for some, bad news for others

Since higher prices mean higher per bushel profits, this is good news for wheat producers in countries that export wheat.

But since higher prices mean higher per bushel costs, this is bad news for people in countries that import wheat.

Top exporters

Top wheat exporting nations are:

  1. Russia: US$7.9B (17.7% of total wheat exports)
  2. United States: $6.32B (14.1%)
  3. Canada: $6.3B (14.1%)
  4. France: $4.5B (10.1%)
  5. Ukraine: $3.6B (8%)
  6. Australia: $2.7B (6%)
  7. Argentina: $2.1B (4.7%)
  8. Germany: $2.1B (4.7%)
  9. Kazakhstan: $1.1B (2.5%)
  10. Poland: $1B (2.3%)

Top importers

Top wheat importing nations are:

  1. Egypt: US$2.7B (5.7% of total imported wheat)
  2. Indonesia: $2.6B (5.5%)
  3. Turkey: $2.33B (5.5%)
  4. China: $2.26B (4.8%)
  5. Nigeria: $2.06B (4.3%)
  6. Italy: $2.04B (4.3%)
  7. Algeria: $1.64B (3.5%)
  8. Philippines: $1.57B (3.3%)
  9. Japan: $1.53B (3.2%)
  10. Morocco: $1.42B (3.0%)

Why does wheat matter?

Wheat Field

It may seem like a dumb question, as wheat has been a food staple for humans now for at least 10,000 years, but what is it about wheat that makes it such a desirable staple?

In a word, starch.

While people all over the world are marketed the importance of protein, what fuels the body is starch.

Yes, we need protein, but the importance of protein is marketed so heavily that most people in industrialized nations eat far more protein than they need.

Wheat matters because it is a form of starch that we’ve learned how to farm effectively, that meets our starch requirements, and that provides high yields.

Higher wheat prices and shortages in wheat importing nations

But, when wheat prices rise, people in developing countries that import a lot of wheat risk running short.

And, because of what I’ll call the financing arrangements developing nations have with the richer developed nations, two global institutions, the World Bank and the International Monetary Fund (IMF) loan money to developing nations.

The money is used for a variety of purposes, including importing food.

Can a wheat importing nation NOT be import dependent?

I see two ways.

  1. Grow enough wheat domestically.
  2. Grow something else.

Grow more wheat domestically

Wheat grows in temperate climates and most wheat in the world is grown in the northern hemisphere. Wheat doesn’t grow well in very arid and tropical climates.

So, for many of the wheat importing countries, this is not an option.

Grow something else

It turns out there IS a major “competitor” to wheat for arid and tropical climates.

Cassava.

Cassava

Cassava is a root crop, in the same way that potatoes are.

They are high in starch, and they grow pretty much anywhere.

Cassava thrives in poor soils and with little water.

Like rice, cassava doesn’t have much flavour itself, so it takes on the flavours of what it’s cooked with.

In most industrialized nations, our only exposure to cassava is tapioca.

Tapioca pearls are made from cassava.

How do crop yields compare?

Here is where it gets really interesting.

Wheat yields vary from 2 metric tonnes per hectare in Australia to 2.7 metric tonnes per hectare in the United States to 9.3 metric tonnes per hectare in Germany.

I do not know why the production yields vary so widely.

By comparison, Cassva yields are ENORMOUS.

The average yield for cassava in the world is 12.8 metric tonnes per hectare, and it is estimated that the high end (under optimal conditions) limit is 80 metric tonnes per hectare.

Why don’t wheat importing countries replace wheat with cassava?

Truth be told, it’s a mystery to me.

In order to wean itself from World Bank and IMF austerity demands, a nation must borrow as little as possible from those two sources.

As food security is paramount for any society, replacing food imports with domestic food production should be a very high priority.

And cassava seems to have great potential to provide the essential starch needs of a population better than wheat does.

So why aren’t wheat importing countries replacing wheat imports with domestic cassava production?

Some are, but not as aggressively as I would expect.

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