Increases in the price of wheat are really putting the pinch on a lot of people here in Yemen. I just read an article that talks about Jordan feeling the pinch as well. Everyone knows that the price of wheat world wide has gone up, but both of these countries claim that the prices are rising faster than the world wide price. I’ve talked about wheat prices in Yemen here, here, and here. I’m sure that the problems plaguing Jordan are similar to the ones in Yemen. My question is, “Why is the price of wheat going up world wide?” Well, you might throw back at me, either demand has increased or supply has dropped. Yes, yes of course (that did pop into your mind, right?) but I’m wondering about the mechanism. The prices have risen by 30% or so, I can’t imagine that demand has risen that much, that fast. I’m leaning more towards the supply side. The traditional culprit of wheat shortages has always been bad crops due to weather, pestilence, locusts, or something. That could have happened, but I haven’t heard of any widespread problems like that. I have no evidence right now (I’m away from the internet and my friend Google right now) but I am eyeing some government interference as a likely problem. No, I am not a broken record, I just sound that way… The new subsidies for corn ethanol have really screwed up the corn markets, and we may be seeing it’s effects on the wheat market as well. Here’s my theory, the subsidies given to corn growers made corn a much more attractive crop to plant, so more people planted corn instead of wheat. And voila! much less wheat gets produced.
The hell of it is that if it weren’t for another subsidy (or more correctly, price control) we could make better ethanol cheaper from sugar. The problem is that the sugar lobby has managed to keep the price of sugar artificially high for the last 30 years or so. I do believe that only two families control all of the sugar production in the US… The government has kept the price of sugar at about twice what it should be for the last 30 years, in other words, we have been forced to pay twice as much for sugar and it has gone directly into the pockets of a couple of families. “That’s not a big deal, I hardly buy any sugar at all,” actually, you buy quite a bit, mostly in the foods that you buy. Sugar is used in many, many prepared foods, and all of them cost more because of the price controls. Now, not only is our food more expensive, but the price control is making us pursue a worse alternative for ethanol. Aren’t subsidies and price controls great?
If anyone has any information and/or links about my wheat scarcity due to corn subsidies theory, I’d love to see them, maybe especially if I’m wrong…