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The prices of wheat and other grains have been soaring worldwide. The impact is felt widely, from household budgets to businesses. The public and private sectors need to consider all possible measures to ensure the stable procurement of grains.
The government has decided to raise the price of imported wheat to be sold to flour-milling and other companies by 19% from October. One of the main reasons is bad weather in production areas. The hike will be the largest since 2008, when mounting demand in emerging economies combined with droughts in production areas led to a 30% increase.
About 90% of domestic demand for wheat is covered by imports. The central government manages in an integrated manner imports of major food items, including wheat, and decides their selling prices twice a year in accordance with international prices.
While the consumption of rice has fallen due to the diversification of people’s eating habits, demand has stabilized for wheat, which is used as an ingredient in many foods such as bread, noodles and confectioneries, making wheat an indispensable grain along with rice. Rapid price fluctuations for wheat are undesirable.
According to the government, if the latest price revisions are passed directly on to food prices, the cost of a 400-gram loaf of bread will rise roughly by ¥2.3 and that of 1 kilogram of soft flour for household use will rise by about ¥14.1. The higher price of wheat is expected to be reflected in retail prices around January next year.
The import price of wheat was raised by 5.5% in April as well. Following that, Nisshin Foods Inc. of Nisshin Seifun Group Inc., the largest flour-milling firm in Japan, raised its prices for flour for household use in July and those for flour for tempura and other purposes in September.
Prices for other grains, such as soybeans and corn, also have remained at high levels, affecting prices for margarine and household use cooking oil, whose main raw material is soybeans. There are concerns about the impact on household budgets.
It is also worrisome that this will deal an additional blow to eating and drinking establishments that have seen their revenues plummet due to shortened operating hours amid the novel coronavirus pandemic.
One of the reasons for the rise in wheat prices is reportedly the crop situation worsening due to high temperatures and dry weather in the United States and Canada, which are major exporters of wheat.
Other factors include an increase in imports of wheat to be used as feed for pigs in China, where the economy has recovered, and rising sea freight rates due to growing so-called stay-at-home demand around the world.
Droughts and other damage are expected to continue due to global warming. The government must consider measures, such as expanding the number of wheat suppliers, and make efforts to establish a system to ensure stable wheat imports.
It is also important to strengthen wheat production in Japan. Domestic demand is growing as consumers increasingly attach importance to food safety.
There is a major bread-making company that sells bread made from Japan-grown wheat. Cultivation of new wheat varieties for udon noodles, Chinese noodles and French bread is also underway. Quality improvement and the expansion of sales channels for these products need to be expedited.
— The original Japanese article appeared in The Yomiuri Shimbun on Sept. 16, 2021.
