Horizons #61: (Part 1) What consumers pay for bread and cereals across the globe

19 November, 2021

by Professor Ross Kingwell, AEGIC Chief Economist

Consumers in different countries pay different relative prices for bread and cereals, and grain flows and market prospects are affected.

For various reasons, governments in some countries introduce policies to make bread and other cereal-based foods more affordable to their populations. Egypt subsidises bread consumption. Russia imposes wheat export taxes to make its wheat domestically more affordable. India imposes a raft of policies to ensure grain-based foods are affordably available to its low-income groups. At the other end of policy spectrum, the Japanese government controls the importation and sale of certain types of grain to provide income support to Japanese farmers, with Japanese consumers then paying more for certain bread and cereal foods.

A result of these government policies and wider economic influences is that there is a global spread in consumer prices paid for bread and cereals (Figure 1). Consumers in wealthy countries like Japan, Korea, and Australia, by world standards, pay relatively more for local bread and cereals products.

Figure 1: Consumers’ relative price levels for bread and cereals in key countries (based on ICP datasets for 2017, see: https://www.worldbank.org/en/news/slideshow/2020/09/16/PLI-chart)

In South East Asian countries (blue bars in Figure 1) that geographically are unsuited to wheat production, bread and cereal products need to be competitively priced to help feed their growing populations and to be a cheap source of calories and nutrients. These South East Asian countries are major markets for Australian wheat exporters.

However, unlike the situation in highly developed countries like Australia or Korea, most South East Asian nations still contain millions of low income households who need access to affordable bread and cereal products.

Accordingly, Australian grain producers and exporters must never lose sight of their need to serve these main customers in South East Asia by producing and exporting wheat and other grains as cost-effectively as possible.

HORIZONS: the AEGIC Economics and Market Insights blog

Expert grains industry analysis and commentary from AEGIC’s Economics and Market Insight Team on a range of big-picture topics that affect Australia’s export grains sector.

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