Wheat prices have doubled in the last two months, notching up the fastest food price rise an economist said he said seen in the last 20 years.
"In the last week alone, the price went up by another 20 percent," said Abdolreza Abbassian, an economist who is also secretary of the Intergovernmental Group on Grains at the UN Food and Agriculture Organization (FAO).
There is no reason to panic, yet. "Any global hike takes at least six months to get transmitted to the domestic markets," he said. What it does mean is that 2011 could be a difficult one for wheat-based foods like bread.
A severe drought and fires in Russia, the world's largest country and one of the top five exporters of wheat, have sent prices skyward. "The prices are not going to come down anytime soon," Abbassian said, but noted that prices were still not as high as the 2008 levels.
|We might need to be very, very cautious next year|
Just a few months ago Russia was considering joining the "food donor club", but after the worst drought since 1972 decimated about 20 percent of its food crops, according to the US government's National Oceanic and Atmospheric Administration (NOAA), the country "may need to rethink its position", Abbassian commented.
On top of the drought, NOAA reported that 948 forest fires, covering 26,000 hectares, were burning in 18 of Russia's 46 provinces during July 2010. The country produces about 15 percent of the world's wheat, which it sells mainly to the Middle East and North Africa.
"At the moment the global reserves are okay, but as the drought continues in Russia it will have an impact on planting for next year; it means we might need to be very, very cautious next year," Abbassian said.
The global stock of cereals, which has until now relied mostly on countries in the western hemisphere, has begun to look towards the Commonwealth of Independent States (CIS), a regional organization comprising the Russian Federation, Belarus, Ukraine, Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan, Uzbekistan and Georgia.
Abbassian pointed out that "Unfortunately, they [CIS] are located in a part of the world which is extremely vulnerable to environmental shocks,", and this could affect agricultural production.