Grim Harvest: The Rising Cost Of Corn Flakes

WASHINGTON, D.C.: A USDA report says some 45 percent of the U.S. wheat crop in 19 states are in poor or very poor condition after a dry spell which has driven farmers in the wheat-belt states to plow under their winter wheat and plant corn or other crops. Inventories of winter wheat have fallen to a 50 year low, and commodity exchanges are seeing record wheat prices. The price of a May wheat futures contract has risen to around $7.00 per bushel, up from $4.95 at the beginning of February. The shortage of winter wheat is part of an overall global grain problem. Global grain production has not grown since 1990, although the world's population has increased by 440 million since then. Huge Chinese consumption exerts substantial influence over the grain supply, and in recent years its demand for feed grain has outstripped domestic supply. In recent years, China has become the world's largest importer of American wheat. One reason is modernization. As Asian countries like China, Japan, Vietnam and Korea industrialize, less land is cultivated for grain crops, and the populations begin to adopt Western-style diets rich in meat and eggs. The upshot: grain supplies drop and prices rise. "What this may mean for American consumers," says TIME's Tom Curry, "Is that, even though the grain itself is only 18 cents of the $3.39 retail price they pay for corn flakes, they may soon find themselves paying more for chicken, pork, soft drinks (made with high fructose corn syrup), pastries, vitamins (such as Vitamin E made from soybean oil), ethanol, and other products."