Thu 6 Sep 2007
TIM CORNWELL, () reports:
A PASTA price backlash is looming in Italy, the cost of a Hovis loaf has hit £1 in some shops in Britain and desperate Spanish farmers are selling off suckling pigs they can no longer afford to feed.
There was no respite in sight yesterday for food consumers or producers as the price of wheat soared further, to record highs.
Reports of damage to Australia’s crop, set against rising global demand for basic foodstuffs, saw wheat buyers rush to lock in supplies. Resulting heavy demand drove up prices in the United States and Europe.
European wheat futures hit a record 300 a tonne yesterday, after a year in which prices have doubled.
In Britain, Premier Foods, which makes Hovis, Mothers Pride and Homepride bread, has raised prices by about 5p a loaf.
In Japan, the price of instant noodles, a staple, has risen for the first time in 17 years.
Zimbabwe’s Lobels Bread, the country’s major bread producer, has cut daily production to 40,000 loaves from 200,000 in May. Deteriorating “flour availability” means it can no longer afford wheat from neighbouring Mozambique, the firm said.
In Spain, suckling pigs are being sold at half price by desperate farmers after the price of feed wheat doubled.
Robert Schofield, chief executive at Premier Foods, said prices had seen “an unprecedented increase” and warned of further rises. Some analysts warn bread could become a luxury item.
The price of staple foods has risen in Italy by 30 per cent recently. A 1lb pack of pasta costs about 50p compared to up to £1.10 in Britain, but consumer groups are demanding a boycott on 13 September.
Italy’s leading flour maker, Grandi Molini Italiani, and pasta and poultry producers are planning further price increases, shocking Italians, said to choose pasta over sex.
Rising wealth and consumption in India and China have seen Asian demand for flour soar.
The green trend for bio-fuels is also blamed for boosting demand for grain.
The US Department of Agriculture, meanwhile, reports world wheat stocks are falling to a 26-year low of less than 115 million tonnes.
But the trigger for this week’s price rises was hot winds sweeping across western Australia, causing severe damage to the already struggling wheat crop.
Australia’s wheat crop could now be two million tonnes lower than even the most pessimistic forecasts, said Kim Chance, western Australia’s agriculture minister.
Australia’s weather trouble “compounds what is already a fairly desperate problem”, said Simon Ingle, head of milling wheat for Britain’s largest farmer-run grain co-operative, Grainfarmers.
“This is extremely serious. Importing nations such as Egypt, India and Morocco have to pay at least twice as much for wheat as they did last year,” he added.
Grain traders said it was difficult to know how much further prices could climb.
“We are not yet at a level where we can ration demand enough to stabilise global consumption,” another European trader said.
“It is hard to say what that level would be. We have no history.”