Imagine a farmer, some seeds of grain and a Prairie field in spring.

How that wheat ends up in a loaf of bread 含羞草研究社� and why prices have soared this year 含羞草研究社� is an odyssey involving growers and grain handlers, rail cars and flour mills, and bakeries and supermarkets.

The journey of wheat from field to kitchen table offers insight into the global forces that influence the price of food and highlights how increasing costs are compounded along a supply chain.

***

Long before grilled cheese sandwiches and toast with jam, laboratory researchers work to perfect a single seed.

Scientists tirelessly research bug- and disease-resistant wheat strains to boost harvests and improve the quality, flavour and sustainability of crops.

含羞草研究社淭hey含羞草研究社檙e developing varieties of wheat with protection against drought and insects and plant disease that are as high yielding as possible,含羞草研究社� said Stuart Smyth, associate professor of agricultural and resource economics at the University of Saskatchewan.

Higher yields increase supply, in turn lowering prices for consumers.

含羞草研究社淟ike any commodity, wheat prices are based on supply and demand,含羞草研究社� said Aaron Goertzen, senior economist and director at BMO Capital Markets.

含羞草研究社淥n the supply side, a huge amount is about how much is being planted and an even bigger factor is what the yield is likely to be.含羞草研究社�

When a new wheat variety is developed, it goes to a crop recommending committee 含羞草研究社� a group of experts recognized by the federal government.

If approved by the Canadian Food Inspection Agency, seed farmers then grow the new variety of wheat, which is sold to farmers to sow in the spring.

***

In the Prairies, farmers like Jake Leguee plant Canada Western Red Spring wheat, a class known for its high milling and baking quality.

Leguee has had good luck with the Wheatland variety. While he含羞草研究社檚 managed to reuse seeds for the last couple of years, he plans to buy new seeds next year.

含羞草研究社淚n the spring, we含羞草研究社檒l drive the semi over to the seed grower and pick up a load of fresh seed,含羞草研究社� Leguee said.

That含羞草研究社檚 just one of dozens of costs that go into growing wheat and other crops like canola, durum, lentils, peas and flax on his 6,000-hectare farm in Weyburn, Sask.

含羞草研究社淚 have direct input costs like seeds, fertilizer and chemicals,含羞草研究社� he said. 含羞草研究社淭hen there含羞草研究社檚 crop insurance, fuel, repairs, maintenance, machinery, land and labour costs.含羞草研究社�

Seeding usually starts in late April and by the end of May, Leguee has planted nearly a thousand hectares of wheat.

For the next 100 days, he works to keep weeds, disease and bugs out of the crop and fertilizes twice during the season.

It含羞草研究社檚 not all in his control: last year, a severe drought withered his crops. Across Western Canada, production of key field crops including wheat fell by more than 40 per cent compared with the previous year, according to Agriculture and Agri-Food Canada statistics.

The lower yields slashed supply, sending the price of a bushel of wheat soaring.

It含羞草研究社檚 a big part of why bread prices have climbed to new heights, and stayed high. As of November, prices for items like bread, rolls and buns were up 18.2 per cent year-over-year, according to Statistics Canada.

Even though growing conditions were better this year, last year含羞草研究社檚 drought left wheat stockpiles at rock-bottom levels, BMO含羞草研究社檚 Goertzen said.

含羞草研究社淚t takes time for supply to level out and prices to normalize,含羞草研究社� he said.

But there are other factors and players along the supply chain that affect prices.

***

By the end of August, as wheat crops turn a golden yellow colour, farmers in the Prairies begin harvesting wheat.

Some is sold right off the combine to grain handlers. The price is spelled out in a contract beforehand using futures prices, a locked-in price for a commodity to be sold at a later date that含羞草研究社檚 determined by markets.

The rest is stored in bins on farms and sold throughout the fall and the following year at a spot or cash price 含羞草研究社� a market price for wheat purchased and delivered today.

But farmers don含羞草研究社檛 set the price.

含羞草研究社淭he market tells farmers what the price is,含羞草研究社� said Smyth, the chair of Agri-Food Innovation and Sustainability Enhancement. 含羞草研究社淎 farmer含羞草研究社檚 costs are independent of the price.含羞草研究社�

Some years, that means farmers lose money on wheat, he said. Other years, they do better.

Farmers like Leguee can try to hedge their bets to get the most for their grain.

含羞草研究社淚 can choose to sell or not but I don含羞草研究社檛 get to set my price,含羞草研究社� he said. 含羞草研究社淚 could set a target price that含羞草研究社檚 maybe 50 cents above the market. The grain buyer might take it or might not, but then it will expire and I含羞草研究社檒l have to try again.

含羞草研究社淏ut at some point I just have to sell.含羞草研究社�

***

The benchmark price of wheat is set on exchanges all over the world.

含羞草研究社淭here含羞草研究社檚 no central mechanism that dictates what prices are,含羞草研究社� Goertzen said. 含羞草研究社淚t is purely supply and demand. So it含羞草研究社檚 determined on a decentralized basis based on the behaviour of millions of different agents.含羞草研究社�

The biggest swings in prices usually occur due to weather, like the drought that decimated crops in 2021.

But other factors play a role. Geopolitical conflict had a strong influence on wheat prices this year, for example.

含羞草研究社淩ussia and Ukraine are both major agricultural exporters. Together they account for almost 30 per cent of global wheat exports,含羞草研究社� Goertzen said. 含羞草研究社淏ut much of that production has been disrupted due to the war.含羞草研究社�

Between the drought in North America and the war in Ukraine, wheat supply plummeted in early 2022, he said.

含羞草研究社淭here含羞草研究社檚 a lot of missing grain,含羞草研究社� Goertzen said. 含羞草研究社淚t含羞草研究社檚 a global market and so the buyers that would normally buy wheat from Ukraine are increasingly moving to other markets and that lack of supply ultimately affects pricing in Canada as well.含羞草研究社�

The price of a bushel of wheat hit $12.94 last March on the Chicago Mercantile Exchange, up from a low of $7.42 in January 含羞草研究社� a nearly 75 per cent increase. It has since dropped to about $8.60.

***

Once a farmer sells wheat to a grain handler, it含羞草研究社檚 sorted and stored in a grain elevator. Much of it is then shipped on rail cars to Thunder Bay or Vancouver.

The rest is typically trucked to local mills to be turned into flour for domestic consumption.

The mills then sell the flour under their own brand directly to consumers at stores. They also sell to grocers for sale under a private label or store brand, and in bulk to bakeries.

Higher labour, transportation, energy and input costs have made each step more costly, said Cereals Canada CEO Dean Dias.

While the cost of bread may have risen more than 18 per cent in the last year, he said no one is getting rich off the increase.

含羞草研究社淚f a loaf of bread is up 50 cents, that含羞草研究社檚 spread out over multiple stops along the supply chain and used to pay for everything from higher labour and transportation costs to higher input costs,含羞草研究社� he said. 含羞草研究社淓verybody in the value chain needs to succeed to have a loaf of bread on the kitchen counter.含羞草研究社�

***

Yet the further wheat travels from farms, the more opaque the price becomes.

In recent years, Canada含羞草研究社檚 big three grocery chains came under fire for a multi-year bread price-fixing scandal.

While the wrongdoing bred mistrust among Canadians, grocers say basic food items like bread have razor-thin margins. Instead, experts say they make money off the volume of food sold.

Still, grocers typically don含羞草研究社檛 provide detailed breakdowns in their financial reports, making it difficult to confirm what the margins on food basics really are.

In October, Canada含羞草研究社檚 competition watchdog launched a study to examine whether the highly concentrated grocery sector is contributing to rising food costs.

含羞草研究社淲heat markets are highly competitive and globally integrated,含羞草研究社� Goertzen said. 含羞草研究社淏ut by the time you get down to the retail level, there含羞草研究社檚 a little bit less competition and probably more pricing power if you含羞草研究社檙e a major food retailer.含羞草研究社�

Despite the higher cost of bread in 2022, it含羞草研究社檚 still one of the biggest bangs for your buck in the grocery store, Dias said.

含羞草研究社淭here含羞草研究社檚 a reason it含羞草研究社檚 a global staple,含羞草研究社� he said.

含羞草研究社擝rett Bundale, The Canadian Press