Why wheat costs so darn much

By Lauren Montero

“Is it a crisis?” Dr. Per Pinstrup-Andersen asked in reference to the rising food prices at the 2008 J.W. Fanning Lecture on Friday. “Depends on how you look at it, some consider it a crisis, some an opportunity.”

Pinstrup-Anderson spoke at the Georgia Center for Continuing Education to a crowd of students, businesspeople, and professors about the reasons for global food crisis and why he feels the price increase is reasonable.

Per Pinstrup-Andersen is an expert in agricultural economics. Among other things he served as past president of the American Agricultural Economics Association and he was the International Food Policy Research Institute’s Director General for ten years.

Sponsored by The Department of Agricultural and Applied Economics, the J.W. Fanning Lecture features national and international leaders in agricultural economics.

During his talk Pinstrup-Andersen repeatedly noted the global food crisis was only a crisis for the poor, specifically in developing countries, because the poor spend a large amount of their income on the raw commodities.

Although the food shortages and increases were only a crisis for some, it was an opportunity for all to examine why it happened.
Pinstrup-Andersen cited government subsidies, droughts, and biofuels as some of the factors that contributed to the global food crisis.

While prices for other goods were rising, food prices were decreasing because farmers received government subsidies. Pinstrup-Andersen told the audience that even though the price of commodities like wheat and corn seem high, the price is basically equal to the production costs of the farms. In the past government subsidies hindered such an economic balance.

Biofuels are problematic because the governments in the United States and European Union subsidize biofuels which increases the demand for wheat and soybeans.

“It’s a wonderful idea at the absolute worst time. This set of activities in my opinion should be postponed” Pinstrup-Anderson said.

The last reason he cited for the crisis was the droughts that plagued many wheat producing areas. Pinstrup-Andersen joked that the media referred to this as climate change, “but maybe it’s just a drought” he said to a laughing audience. Food stocks were already low when the drought occurred. Combined with the increased demand for wheat for biofuels a shortage ensued.

Overall Per Pinstrup-Andersen’s lecture was well received. The audience enthusiastically applauded him after he finished speaking.