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A farmer harvests wheat in a field near Dortmund, Germany. The U.S. Agriculture Department has predicted that by next year, the world's wheat stockpiles will have dwindled by almost seven per cent. ((Ina Fassbender/Reuters))

A lot of people are justifiably worried about the rising price of wheat.

Russia has banned exports. Ukraine is moving in the same direction. And the U.S. Agriculture Department has predicted that by next year the world stockpiles will have dwindled by almost seven per cent.

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Don Pittis has reported on business for Radio Hong Kong, the BBC and the CBC.

For one group of oddballs, however, the threat of a global wheat shortage just doesn't have the same scare effect.

For people like me, because I am one of those freaks mentioned above, wheat is not the staff of life. It is poison.

It is hard to imagine how people like me, estimated to be as many as one out of 100 in the population, ever made the cut. Darwin's cut that is.

Somehow we did, and it puts me in a perfect place to discuss the current purported wheat shortage dispassionately, because I really don't care if there is a wheat shortage. You wheat-eaters can divide up my share.

Whether you eat it or not, the story of wheat and its economics is a fascinating one.

Wheat has been grown, eaten and traded for about 10,000 years, give or take few thousand. And despite Russia's decision to close its borders to exports, wheat remains a truly global commodity.

Historically, famine, a shortage of grain, was a constant worry. The biblical character Joseph earned his freedom by predicting a famine, his fame by preventing one.

"And the famine was over all the face of the earth: and Joseph opened all the storehouses, and sold unto the Egyptians," the Bible says.

And that is why we don't generally have famines these days: global trade, and lots of storehouses.

Nowadays, modern Egypt usually gets its wheat supplies from Russia and Ukraine. This year, Egypt and its middle-eastern neighbours are suddenly searching for a new source of supply. Fortunately, that supply is out there. At a price.

Supplies tallied worldwide

One way to think of the international wheat supply is a giant grain bin sitting somewhere safe. This is what the U.S. Department of Agriculture does in its latest global grain tally.

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A baker places loaves of freshly baked bread on a rack to cool in Strasbourg, France. Fears of a wheat shortage can by themselves create shortage, as countries and individuals buy more than they need and keep it for themselves. ((Vincent Kessler/Reuters))

The reason the grain bin is safe is because it is not actually sitting in one place, but spread all over the world. But in your imagination, you can picture the one big bin.

As you wheat-eaters around the world gobble up your toast every morning, and sandwiches at lunch, the bin gradually empties, little by little. Every time a group of farmers has a successful harvest, depending on their local growing season, the gnomes at the USDA imagine them pouring their crop into the giant bin. Not only that, but the gnomes use their fancy computers and their collection of data to estimate how full the grain bin will be over the coming year.

This year, while Eastern Europe's crop has been devastated by heat and Canada's reduced by flooding, in the United States things are completely different. The world's biggest grain exporter is expecting a bumper crop, its biggest ever.

What the U.S. agriculture report tells us is that while you wheat-eaters will consume more than the world produces this year, the stockpile remains secure. There will be plenty left in the bin by next year's northern hemisphere harvest. Last week, I heard some excited reports that the Canadian price of bread was going to rise by 20 per cent.

If that happens, it is nothing but a scam. I strolled to the grocery store nearest to the CBC to check on the price of bread. A nice wholesome loaf of Dempster's multigrain was selling for $3.49 for 600 grams. Depending on exactly how much of that loaf is water and other ingredients, a quick calculation, just by weight, shows the actual grain content is worth less than 20 cents. (I was going to desiccate a slice and weigh it before and after, but my editor was pestering me to finish.)

Higher prices can be good thing

In Canada, most of the price of bread is in post-farm manufacturing and labour and shipping and advertising and packaging and store rent. Don't blame the farmer. In one way, a higher price for wheat is good. High prices encourage farmers to plant more, helping the world fill up its giant grain bin.

However, if all the world's farmers respond the same way and plant fence post to fence post, it can bring prices crashing down, discouraging them from planting the next year, creating an agricultural boom and bust. And for the world, feast and famine.

Thus the economic value of the USDA's careful data collection, and the economic justification for agricultural marketing boards that try to even out prices and supply. 

The people who are hurt most by rising food prices are the world's poorest, who spend a large portion of their income on basic food. In poorer countries where labour is cheap and packaging minimal, the price of bread is mostly the price of wheat. That is why driving prices up unnecessarily can really hurt the poor. Fears of a shortage can by themselves create shortage, as countries and individuals buy more than they need and keep it for themselves.

"They trigger hoarding and lead to price distortions," World Bank official Ngozi Okonjo-Iweala recently told the Financial Times.

Fears of a shortage also trigger speculative trading, where commodity traders bid up the price in anticipation of further rises. That's what happened last week when Russia first announced it would halt exports. Prices have since declined.

Many now say hoarding and speculative price rises, more than food crop diversion to ethanol, helped create the food crisis of 2007 that led to a shortage and riots.

The verdict for now is "no crisis."

But I don't want you wheat-eaters to think that those of us who can't eat wheat don't care. A true shortage of wheat would just send you after our rice and corn and potatoes and quinoa.

And those of us who can't eat wheat (or its cousins barley and rye) do have an interest, of course. We would like to see prices rise just enough so manufacturers would darn well stop putting wheat and its products into things like ice cream and sausages and chocolates and turning them into poison. As far as we are concerned, you can send that wheat to people who need it more.