Food price rises

There should be no reason for food prices to increase dramatically due to the rapid spike in wheat prices during the last month (your report, 31 July).

The London futures market wheat price has fallen from a high of 180 per tonne following the harvest of 2007 to around 110, somewhat below the cost of production, for most of the subsequent two years.

I don't recall many reductions in the price of food in this period. During this time any buyer of cereals could have covered all of their requirements for the next year at a low cost. While it might be considered foolhardy to take 100 per cent cover, any risk management policy would flag up the fact that if you can buy what you need at less than the cost of production it is not a gamble.

In the past month there has been a steady drip of weather-related bad news and a panic to buy which is self-fulfilling, bringing in financial speculators who thrive on volatile markets.

This is the reality of leaving market forces to determine the price of wheat, upon which the cost of so much food is based. No doubt the companies mentioned are subject to increases in the cost of many of their inputs, but I cannot believe they do not have policies in place to hedge their cereal purchases.

DOUGLAS M MORRISON

Amisfield Mains

Haddington, East Lothian