As powerful businesses rush to cash in on the biofuel gold rush, food prices are going up worldwide not just in Canada.  Here’s another article about that issue as we turn land for food into land for fuel for cars and trucks (to transport food and other consumer goods far and away).  

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(Feb 18, 2008) (The Canadian Press) REGINA — It’s fixing to get a lot more expensive to bring home the bread as skyrocketing wheat prices squeeze bakers, pasta makers and anyone else who relies on flour to produce their wares.

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Bake shops across the country report that the cost of a bag of flour has doubled or more in a matter of months, making it impossible to hold the line on the prices they charge their customers. The increased cost of eggs, butter, shortenings, fruit and other farmed ingredients is compounding the situation. 

“It’s not an industry that is doing well at this time, and that’s an understatement,” said Paul Hetherington, president of the Baking Association of Canada, based in Mississauga, Ont.. “To say the situation is dire — I tend not to want to use words like that, but I think it is fair in this case.” 

Shrinking global grain stocks are behind the wheat price hikes. 

Australia has gone through two years of drought, and nagging weather problems in other parts of the world have put a dent in yields. 

The biofuels movement has been blamed for leading grain farmers to switch to other crops. But the effects on wheat prices are unclear because wheat is not grown in the same parts of the world as corn, which is the main crop used for ethanol. 

World wheat stocks at the end of this marketing year are expected to be the lowest they’ve been since the late 1970s, and in the United States stocks are the tightest they’ve been since just after the end of the Second World War, says Bruce Burnett with the Canadian Wheat Board. 

“It’s a very, very tight situation,” he says. “World production has been under consumption in the last couple of years, so we have been drawing stocks down … and we’ve finally hit levels that have made the market very, very concerned about supplies and rightly so.” 

Generally, the situation has meant prices have doubled in most of the main wheat classes and are likely to remain high for at least the next 18 months, Burnett says. 

“It will take a couple of production cycles, even with the most optimistic yields, to help build the stock levels up in the world to a comfortable level.”

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At the Bee-Bell Health Bakery in Edmonton’s trendy Old Strathcona district, it has meant the cost of a 20-kilogram bag of bread flour has risen to $18 from $9.50 last September. 

General manager Pete Plaizier can remember a time, not that long ago, when a 25- or 30-cent increase in the price would send the industry into a tizzy. The last two price increases — both within the last month — were more than $2. 

“It’s unbelievable, it’s just going crazy,” Plaizier says. 

The shop has boosted its prices twice in the last two months. A $2 loaf of bread, for example, now costs about $2.60. 

“That’s unheard of in baking.” 

In Toronto, Sal Cofone says he is worried about the future of his business. Cofone’s Queen’s Pasta has been distributing fresh-made and frozen product to some of the city’s finest restaurants for the last 25 years. 

A year ago Cofone was paying $24 for 40 kilograms of flour. Now he is paying $54. Eggs, which come from chickens fed with grain, have also gone up. 

“We cannot go like this, it’s just terrible,” Cofone says. “We can only absorb so much, but people, the users, the restaurants, they don’t understand that.” 

Cofone recently raised his prices by 10 per cent, but that angered his customers. 

“Everybody put their hands in the air and say, `Why, why?’ I say, `What do you want me to do, serve you or close the doors?”‘ 

The higher wheat costs will take longer to hurt larger food producers who lock into long-term supply contracts, but that protection will only last so long, Hetherington says. 

“It’s an industry problem,” he says. “The reality is, if you have escaped the worst of it to date, you are going to be experiencing those same types of cost pressures when your contract expires.” 

Plaizier figures his shop will be paying $25 for a 20-kilogram bag of bread flour before prices stabilize. 

“We can’t wait to react. You have to be quick — you can’t say, `Well, let’s look at this in four or five months,’ because by that time you could have lost $20,000,” he says. 

“You have to keep up. It’s almost a full-time job.”

Tags: barley, biofuels, ethanol.