Wither the Wheat

Uncontrolled fires and the worst drought ina century have sent Russia's farmers scrambling to bring in the wheat crop this year. At the end of August, Prime Minister, Vladimir Putin, announced a temporary ban on grain exports from the country in an effort to increase food security within the nation's borders and to keep prices stable. Despite these efforts, Russian citizens are already seeing the effects of the bad harvest, with their beloved kasha -or buckwheat- disappearing from grocery store shelves. This has sparked a wave of panic-purchases, hoarding and speculation by the Russian people who, form past experience, have witnessed government trouble following the scarcity of staple commodities (flour, sausage, table salt and vodka to name a few).

But the trouble isn't contained within the nation's borders. With the absence of Russian wheat in the global marketplace and the increased demand of grain imports into Russia, the price of wheat has been steadily rising -and with the increasingly dismal projections for Russia's wheat crop (even now only 30% of the allocated cropland has received enough rainfall for a winter wheat planting) the situation looks to only be getting worse for consumers. In wealthy nations, where food dollars account for only a fraction of the family income (7% in the USA), this rise in grain prices is a nuisance, but in less wealthy nation, food dollars can account for as much as 80% of total income, making a rise in the market price a very big deal. Riots in Mozambique have already erupted earlier this month in response to a 25% increase in the price of bread.

At the same time, there are those who secretly enjoy Russian farmers' misfortune -namely, other wheat farmers around the world. With the price of wheat being driven up and the increased demand in not only Russia and Eastern Europe, but all over the world, Framers in the United States and Australia have much to gain. Already, Egypt, the world's largest importer of wheat, has committed to purchasing 225,000 metric tons of wheat from the US for a price 5% higher than a month ago. The UN has raised export estimates for the US to43% after Russia's wheat forecast dropped 10% at the beginning of this month. US corn is becoming more profitable as livestock producers switch from other grains to corn-feeding their animals and despite a dry season and expected locusts later in October, Australian farmers have made a strong start and expect to profit from increased exports as well.