Abstract
Significantly, wheat is the key product in demand on the market. One of the main products created from wheat is flour. The main objective of this paper is to analyze prices, demand, and the key trends in wheat production and distribution.
Thus, the research paper aims to provide basic information about wheat-producing countries and the distribution of wheat and its derivatives. Therefore, the paper also includes supermarket prices and pricing trends in the United States and France. The basic information on wheat and trends in the U.S. and France was established. Thus, the pricing system for wheat and other commodities is presented. The impact of seasonal and cyclical fluctuations on prices is also explained. Marketing strategies and operating costs of companies in the agribusiness sector are described.
Introduction
Wheat is a herbaceous plant, one of the main cereal crops worldwide. To establish the origin, scientists analyzed the grain’s genetic code, using both wild and cultivated wheat variants for comparison. The research suggests that it originated in southeastern Turkey.
Additionally, the history of cereal dates back thousands of years, and its appearance and qualities have evolved gradually through human intervention. It was grown by all ancient civilizations. It is known that in Ancient Egypt and China, it was consumed as early as 4000 years before Christ. In Ancient Greece, wheat cultivation began approximately 5,000 to 6,000 years ago (Hanson, 2021).
By the beginning of our era, the plant was widespread throughout Asia and Africa. The development of milling production allowed people to separate the grain from the hull. The most valuable and useful parts of the grain hull became waste, used as livestock feed.
Types of wheat are divided into two main groups based on the quality of the straw and the ear. These characteristics determine the ease of further processing of the mowed grain (Hanson, 2021). The first group is true wheat, meaning that the grain is easily separated from the flower membrane, the spikelet sits firmly on the stem, and the straw is flexible and resilient enough not to be crushed during threshing. The second group, spelled, is characterized by grains that can hardly be separated from the film; the spike easily separates from the straw, which is readily broken during threshing (Hanson, 2021). This indicates a wide variety of wheat types and their popularity among the people.
Correlated to the above is the division by hardness, focused on the quality of English soft wheat and Polish durum wheat. The former includes a list of varieties such as Kostroma, Sandomirka, Girka, Kuyavskaya, and other awnless varieties. The hard wheat varieties are spring and awned, including Ganovka, Beloturka, Krasnoturka, Kubanka, Chernokoloska, and several others (Hanson, 2021). They also have distinctive features: the straw of soft wheat is thin-walled, hollow along its entire length, and thick-walled, filled with a spongy mass throughout or near the ear.
In addition, the spike is shorter and broader in soft varieties, and the English has a large inflorescence densely planted with spikelets, spreading in width. Polish wheat is more like a reed, with elongated films; its grains are denser and require more effort to thresh. Moreover, the grains of Polish wheat are long, resembling rust seeds, and yellow-amber, while English wheat is short, bubbly in the middle, and less ribbed, white, or with a reddish tint (Hanson, 2021). Accordingly, wheat is a versatile product that can be utilized in various ways, depending on its specific characteristics.
As a result, wheat is the most widely grown cereal crop worldwide and is second only to corn in terms of acreage. It serves as the primary source of vegetable protein in the human diet and is considered a strategic food product in many countries (Hanson, 2021). In terms of nutritional value, this cereal is far superior to other popular crops such as rice and corn. In addition to protein, it contains fats, starch, vitamins B, PP, and E, as well as carotene and ergosterol, the precursor of vitamin D (Hanson, 2021). Therefore, it is essential to provide information about millet, including pricing, analysis, prospects, trends, and recommendations.
Discussion of Commodity
It is essential to note that wheat is cultivated in numerous countries and exported globally. China has accounted for about 17% of the world’s wheat production over the past 20 years. India accounts for approximately 12.5% of the world’s wheat production.
Russia’s share of the global wheat harvest is 8.4% (Hanson, 2021). The country is the world’s largest wheat exporter. Although the United States has harvested almost as much wheat as Russia over the past 20 years, it ranks second in global wheat exports. Wheat is also produced in France, the Czech Republic, Ukraine, and other countries (Hanson, 2021).
However, wheat is sown according to variety and other factors, such as weather conditions and soil moisture. Spring crops are sown from early spring to early summer and harvested in late June or early July, depending on the regional climate conditions. The sowing period for winter wheat is approximately from mid-August to the end of October (Hanson, 2021). Additionally, spring wheat harvesting begins in late June, depending on weather conditions, in a similar manner to winter wheat.
Wheat has a production cycle that spans a year, encompassing sowing, growing, and harvesting. Furthermore, the price of sowing and harvesting wheat per acre ranges from $50 to $200 (Erenstein, Chamberlin, and Sonder, 2021). This is explained by the fact that farmers can use different seeds, fertilizers, fuel, and machinery. Moreover, the price includes labor costs and the farmers’ personal efforts.
Additionally, the primary agribusinesses that purchase grain include Bunge Ltd, Nutrien Ltd, Corteva Inc., and the VanEck Agribusiness ETF (Erenstein, Chamberlin, and Sonder, 2021). Also, many products are made from wheat, besides bread itself, the main ones being semolina, bulgur, couscous, and pasta. Thus, wheat is an indispensable product in people’s rations, which is why it is grown on a large scale.
Discussion Prices in Stores
King Arthur flour is available in many stores, but it is particularly accessible at Walmart and Target. Accordingly, at Walmart, the flour costs $5.24, and at Target, it costs $5.59 (Erenstein, Chamberlin, and Sonder, 2021). It is essential to note that the price in both stores is for a 5-foot package.
Additionally, the stores carry a variety of flour brands, not just King Arthur, allowing shoppers to choose the one that best suits their needs. For example, the Good & Gather brand offers flour for $ 2.50, while Bob’s Red Mill offers children’s flour for more than $9. Therefore, this indicates that these stores have a similar selection of flour brands but vary in price, as Target’s products are approximately 50 cents more expensive (Erenstein, Chamberlin, and Sonder, 2021). Hence, Walmart and Target offer a large selection of flour to consumers.
It is worth noting that King Arthur Flour is a well-known consumer flour brand in the United States. The corporation offers not only regular flour but also flour for baking specialty products or for people with special needs. In its advertising, the brand highlights that the flour is produced using innovative products and by a team of professionals. In both stores, however, the benefits of each type of flour are not mentioned, and the packages are placed on the shelves (Erenstein, Chamberlin, and Sonder, 2021).
Thus, only the product manufacturer advertises, and the store can use social media or an in-store announcement to promote the flour when it offers discounts. In general, product promotion depends not on the store that sells the product, but on the manufacturer. Each manufacturer chooses different methods to promote flour, depending on its target audience and budget.
Analysis, Outlook, and Trends
Aspects of Agribusiness
Bunge Ltd is one of the businesses engaged in the purchase and transportation of grain, a key component of the agro-industry. It is one of the leading agribusinesses in the United States, operating across 40 states and employing 37,000 people (Bunge, n.d.). Moreover, Bunge’s 2022 revenue totaled $67.232 billion, demonstrating the company’s robust sales.
The company supplies wheat, corn, and rice products to food processing companies, bakeries, brewers, caterers, and snack food manufacturers. Meanwhile, the firm is estimated to be worth $14.52 billion and is present in major countries, including the United States, Brazil, and Argentina (Bunge, n.d.). Given the market structure, Bunge Ltd. operates in an oligopolistic environment. Multiple large companies with intense market penetration and substantial oversight of the distribution value chain typically define the agricultural business.
Product Information and Price Variations
Wheat is a non-perishable commodity, meaning it can be stored for extended periods and transported. Drying the grain to ensure it can be transported and stored for an extended period is also essential. The season of sowing affects the final cost of grain because, during the harvest, it is cheaper (Bunge, n.d.). In contrast, in the spring, the price of grain increases as the new sowing season begins, and the amount of grain on the market is insufficient. Cyclical expense fluctuations also depend on market supply and demand for wheat and on overall grain stocks (Bunge, n.d.). Thus, if the plantings are growing and wheat stocks are low, the cost of wheat will be high.
Flour
The primary factors influencing changes in per capita flour consumption include population growth, preferences, income levels, lifestyles, and health trends. As the population grows, so does the consumption and demand for flour and bread. Furthermore, people’s preferences may change over time, and they may not consume flour depending on their lifestyle (Bunge, n.d.). Income levels and economic conditions affect people’s purchasing power. Additionally, people’s lifestyles influence per capita flour consumption, and health trends, such as a decline in gluten consumption, can decrease the demand for flour.
Flour Trends in France
France’s culture and its inhabitants’ lifestyle place special emphasis on culinary trends in flour use. Moreover, in France, the population is more stable in terms of structure and economic factors, which is why they constantly use flour (U.S. Department of Agriculture, n.d). Their income level allows them to maintain high consumption trends for rolls and bread.
Additionally, the French’s cultural preferences play a crucial role in shaping flour consumption trends (U.S. Department of Agriculture, n.d.). Traditional French breads, such as baguettes, have long been a favorite among consumers. Gluten-free ingredients are a popular substitute for flour and bread in France. Other factors include health concerns, and the French are switching to healthier flour options, such as whole grains or natural ingredients.
Pricing System
A typical pricing strategy for flour incorporates factors such as wheat prices, processing costs, transportation costs, market competition, and buyer interest. Furthermore, Bunge may also submit supplementary pricing systems, such as deals based on quantity or sales-promotional pricing, to inspire consumers and boost product sales. Bunge Ltd. has substantial control over the agricultural marketing system, especially in the upstream and downstream phases of the grain value chain (Bunge, n.d.).
The firm’s capacity to support processing, storage, logistics networks, and promotional activities is a significant advantage. Its geographic presence enables Bunge to optimize supply chain management, reduce transportation costs, and efficiently respond to regional market conditions. The company’s corporate philosophy is founded on the principle that it strives to be a reliable business partner to producers, suppliers, buyers, and consumers (Bunge, n.d.). Bunge is also resolved to ensuring the integrity by using products through rigorous industry efforts, adhering to industry standards, and meeting regulatory requirements.
Wheat grades and quality standards are applied at multiple levels of the supply chain, including farms, wholesalers, and retailers, to inform pricing decisions and foster consumer confidence. Standards measure wheat grade based on factors such as moisture content, foreign matter, damaged grains, protein content, and weight (Gómez, Gutkoski, and Bravo‐Núñez, 2020). At the farm level, the classification helps determine wheat value, enabling farmers to engage in price discussions.
Wholesalers use grading to assess wheat quality and set purchase prices. Retailers rely on classification standards to ensure the quality of flour and wheat-based products they sell (Gómez, Gutkoski, and Bravo-Núñez, 2020). The classification standards foster consumer confidence by providing transparency and consistency, reassuring consumers that the wheat or product meets specific quality criteria, and thereby contributing to informed purchasing decisions.
Wheat Cycle at Bunge Ltd
Bunge Ltd. obtains its wheat through various techniques, including direct purchases from farmers, the use of intermediaries such as grain dealers, and participation in commodity exchange markets. The commodity is typically shipped from producers to processors by a combination of transportation modes, including trucks, trains, and barges, depending on the location. If the wheat is exported, Bunge maintains a consistent process that includes quality inspection, compliance with export regulations, and coordination with transportation companies (Bunge, n.d.). The merchandise is stored in Bunge’s storage facilities, including silos and bins, which are equipped with quality control measures to ensure the integrity of the wheat during storage.
Summary, Conclusions, and Recommendations
Therefore, wheat is one of the main products in the sphere of agricultural firms’ activity. Wheat is used to produce a wide range of products. However, one of the most popular products is flour, as it is used in the production of basic foods.
Seasonal and cyclical conditions influence wheat and flour prices; however, the general trend is an increase in the consumption of wheat-based products. It is also worth noting that wheat is cultivated worldwide, and consumers highly seek its products. Consequently, the industry faces significant competition, particularly in the international market.
Nevertheless, large agri-companies can promote their products in markets where consumers have a cultural preference for consuming flour-based products. For this purpose, they need to focus on the French market and invest in developing their capacities and representative offices there. Although there is considerable competition in the agribusiness sector in France, successful advertising and marketing strategies can help conquer niche markets.
Another option is to form a partnership with French bread and bun producers. In this way, Bunge Ltd will be able to provide the company with products, such as flour, and local producers who are popular with consumers will produce bread. To achieve this, Bunge Ltd needs to be better known in the French market and offer favorable terms of cooperation.
Moreover, the global distribution system for wheat and its derivatives is well-established. However, it is possible to produce more products, tailored to consumer preferences, at multiple locations. This will expand the distribution market and cater to the preferences of specific consumers.
References
Bunge, Connecting Farmers to Consumers to Deliver Essential Food, Feed and Fuel to the World. Bunge Limited. n.d.
Erenstein, O., Chamberlin, J. and Sonder, K. “Estimating the global number and distribution of maize and wheat farms.” Global Food Security, 30(2021): 1-10.
Hanson, H. Wheat in the Third World. Oxfordshire: Routledge, 2021.
Gómez, M., Gutkoski, L. C. and Bravo‐Núñez, Á. “Understanding Whole‐Wheat Flour and Its Effect in Breads: A Review.” Comprehensive Reviews in Food Science and Food Safety, 19(2020), 3241-3265.
U.S. Department of Agriculture, Food Price Outlook. Economic Research Service. n.d.