Masha Block
09/02/2010
11:00 am
Labor/Production
Russia's summer of drought brought yields of wheat and barley down drastically and has sent global wheat prices way up since June. For the first time since 2004, Russia will produce less grain than it consumes. The harvest is down more than 30% and Russia may have to consider importing wheat. The rise in wheat prices has in turn increase the bread prices. Even though the drought brought bad side effects it has also brought a profit of $1.4 million. The benefit in raising prices is that in the long run, the prices will more than make up for the loos in in yields. When Russia banned the export of grain, they were hoping to reduce the domestic prices which pleased the farmers but the rise in bread prices was unsettling for the locals. Bread prices are an emotional issue for Russians. Russia "possesses the world's largest reserves of fertile but fallow fields." A big question is if Russia will disperse its grain produce or keep some incase of a bad harvest next year. The decision rests on if Russia gets rain in the next week and improve chances of better harvest for next year.
The decrease in Russian wheat yields is something that will come to impact more than just Russia. If Russia continues to export the yields they will hurt their own economy in that the grain they are exporting could be and is needed by their own country. Russia is forced to make a tough decision to make. If they export and run low they will have to import grain, making it a first for them in decades. Prices of produce will always fluctuate but when its something like grain, that makes bread, it becomes an issue that effects every person. The poorer people are getting affected more because before the increase they may have already been struggling to feed family. With in the next few weeks this issue may clear up or become even more of an issue.
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