Poor spring wheat harvest may mean higher bread and cereal prices

Wheat field
A wheat field in north central South Dakota shows the effects of exceptional drought conditions. Farmers expect lower yeilds from their wheat crops this year. Even though prices are near $5 a bushel, fewer acres of wheat were planted in 2006.
MPR Photo/Cara Hetland

There's wheat in a lot of what we consume. It's in cereal - toast. In lots of packaged foods too.

What's fueling cereal prices?
Experts say while farmers will benefit from higher grain prices, higher prices in the grocery store are more about fuel prices than wheat.
MPR Photo/Cara Hetland

As consumers we may not pay close attention to what's happening the in the wheat fields of the upper midwest how that translates to our household's bottom line but soon we may not have a choice.

There's less wheat being produced this year. In Minnesota the number of acres planted is the lowest in the last 34 years but the price paid to farmers is up.

Dave Torgerson, executive director of the Minnesota Association of Wheat Growers, says some farmers may only get half a crop. In north central South Dakota, wheat fields are dry, stalks are short and the heads are small.

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"What we have right now is what we'll get," Torgerson says. "Nobody really knows what we have ... the fields are varied, some parts are good and some parts are bad and the rain has been very scattered."

There's a lot of other reasons for increasing the (cost of) bread.

Consumers have already seen an increase in the price of flour in the grocery store. Torgerson says that's because processors are anticipating the higher cost of wheat. But fewer people buy flour. Instead most will notice the increases when they hit processed food like cereal and bread.

Food processors like General Mills and Cargill refused to comment for this story because it's company policy not to discuss commodity prices.

But if you go to your local grocery store and notice a loaf of bread costs more, Torgerson says it's not the cost of wheat that's contributing much to the increase.

"There's a lot of other reasons for increasing the bread," he explains. "That may be fuel, transportation costs, labor costs, marketing costs. All of those go up. They go up faster than the price of wheat."

Torgerson says more farmers are switching to reliable crops like corn and soybeans. Wheat has not been genetically engineered and is less tolerant to extreme weather conditions. He expects farmers will continue to plant fewer and fewer acres of wheat.