Emptying the Breadbasket

For decades, wheat was king on the Great Plains and prices were low everywhere. Those days are over.

At Stephen Fleishman’s busy Bethesda shop, the era of the 95-cent bagel is coming to an end.

Breaking the dollar barrier “scares me,” said the Bronx-born owner of Bethesda Bagels. But with 100-pound bags of North Dakota flour now above $50 — more than double what they were a few months ago — he sees no alternative to a hefty increase in the price of his signature product, a bagel made by hand in the back of the store.

I’ve never seen anything like this in 20 years,” he said. “It’s a nightmare.”

Fleishman and his customers are hardly alone. Across America, turmoil in the world wheat markets has sent prices of bread, pasta, noodles, pizza, pastry and bagels skittering upward, bringing protests from consumers.

But underlying this food inflation are changes that are transforming U.S. agriculture and making a return to the long era of cheap wheat products doubtful at best.

Half a continent away, in the North Dakota country that grows the high-quality wheats used in Fleishman’s bagels, many farmers are cutting back on growing wheat in favor of more profitable, less disease-prone corn and soybeans for ethanol refineries and Asian consumers.

“Wheat was king once,” said David Braaten, whose Norwegian immigrant grandparents built their Kindred, N.D., farm around wheat a century ago. “Now I just don’t want to grow it. It’s not a consistent crop.”

In the 1980s, more than half the farm’s acres were wheat. This year only one in 10 will be, and 40 percent will go to soybeans. Braaten and other farmers are considering investing in a $180 million plant to turn the beans into animal feed and cooking oil, both now in strong demand in China. And to stress his hopes for ethanol, his business card shows a sketch of a fuel pump.

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Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin

April 28 (Bloomberg) — As farmers confront mounting costs and riots erupt from Haiti to Egypt over food, Garry Niemeyer is paying the price for Wall Street’s speculation in grain markets.

Commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in U.S. silos on March 1. The holdings jumped 29 percent in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records and boosted the cost for growers and processors to manage risk.

Niemeyer, who farms 2,200 acres in Auburn, Illinois, won’t use futures to protect the value of the crop he will harvest in October. With corn at $5.9075 a bushel, up from $3.88 last year, he says the contracts are too costly and risky. Investors want corn so much that last month they paid 55 cents a bushel more than grain handlers, the biggest premium since 1999.

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Rice Rationing Hits Israel

PALO ALTO, Calif. – Rationing of rice by retail stores has spread as far as Israel since The New York Sun reported on the phenomenon in Northern California last week.

The Blue Square and Supersol supermarket chains have begun limiting purchases of rice, Israeli newspapers said yesterday. Supersol is restricting each customer to “three bags per type of grain product,” the Jerusalem Post reported.

Meanwhile, Asian grocery stores seem to be joining their larger wholesale-style competitors in curbing purchases. A supermarket chain which caters to Chinese Americans, 99 Ranch, is imposing two-bag-per-customer limits on most of its 20-pound and 50-pound sacks of rice, according to signs at its store in Cupertino, Calif. That store and others in the chain were selling rice without limitation a week ago.

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Food Rationing Confronts Breadbasket of the World

MOUNTAIN VIEW, Calif. – Many parts of America, long considered the breadbasket of the world, are now confronting a once unthinkable phenomenon: food rationing. Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.

At a Costco Warehouse in Mountain View, Calif., yesterday, shoppers grew frustrated and occasionally uttered expletives as they searched in vain for the large sacks of rice they usually buy.

“Where’s the rice?” an engineer from Palo Alto, Calif., Yajun Liu, said. “You should be able to buy something like rice. This is ridiculous.”

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In lean times, biotech grains are less taboo

A farmer harvests soy beans on the outskirts of Gualeguaychu, north of Buenos Aires.(Andres Stapff/Reuters)

Soaring food prices and global grain shortages are bringing new pressures on governments, food companies and consumers to relax their longstanding resistance to genetically engineered crops.

In Japan and South Korea, some manufacturers for the first time have begun buying genetically engineered corn for use in soft drinks, snacks and other foods. Until now, to avoid consumer backlash, the companies have paid extra to buy conventionally grown corn. But with prices having tripled in two years, it has become too expensive to be so finicky.

“We cannot afford it,” said a corn buyer at Kato Kagaku, a Japanese maker of corn starch and corn syrup.

In the United States, wheat growers and marketers, once hesitant about adopting biotechnology because they feared losing export sales, are now warming to it as a way to bolster supplies. Genetically modified crops contain genes from other organisms to make the plants resistance to insects, herbicides or disease. Opponents continue to worry that such crops have not been studied enough and that they might pose risks to health and the environment.

(Genetically modified crops have been studied long enough to know that GM food weakens the immune system within days, increases the cancer risk dramatically etc. – The Infinite Unknown)

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