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Farmers might benefit by learning from food processors in terms of price propaganda. It would be a change if they placed themselves in the driver's seat on this one. (500 words).

It was just over a year ago, late in 2003, that bakers and millers were using increases in wheat prices to excuse themselves for higher flour and bread prices. These higher wheat prices were, of course, disappointingly short lived.

With prices back to where they were two years ago, a roll back in flour and bread prices might have been expected. Having attributed the increase to farm gate prices, it might even have seemed appropriate for mention of the fall in food prices coming courtesy of the much maligned farmer. But, surprise, surprise, nothing has been heard.

The reality is, of course, that wheat, although physically more than 80 percent of a loaf, represents a very small portion of its cost - less than 10 percent and in some cases very much less than that. And the babble from the millers and bakers, echoed by the press, was nothing more than that.

Energy is a far larger cost component in a loaf than wheat. The processes of milling, gristing, baking and distribution of bulky bread are all energy intensive processes. And energy prices have been far more volatile than those for wheat.

This much is almost certainly known to wheat growers, who share the heavy habit of energy use with the millers and bakers. But this only makes the nonsense about higher wheat prices pushing up the price of bread that much more irritating.

Farmers are, of course, being told to get closer to their customers and perhaps here is an opportunity to learn.

One might assume that this kind of beggar thy (marketing chain) neighbour propaganda is in some way effective. If it were not so, the sophisticated public relations departments of major bakers and millers would not indulge in it.

Perhaps someone could calculate the added cost of fuel needed to produce a tonne of wheat and from there the added cost for producing a loaf of bread. And then "with authority," note that bread prices can be expected to rise by that amount, sooner or later, to cover farmers' increased costs.

Indeed this could become a regular feature following any increase in farm costs. A substantial deficit would surely accumulate and this could be given a catchy name like Farmers' Contribution to Low Prices (FarmCLiP).

By the time there were any farm gate price increases, there would be a considerable accumulation of the FarmCLiP. Not only could it be used to "excuse" the price rise, but also to suggest more were imminent.

None of this makes much sense in the context of prices being determined by supply and demand, but food retailers and processors seemed to have made this kind of propaganda work for them, so perhaps it could work for farmers.

February 21, 2005