A "perfect storm" of conditions driving up the cost of making pasta and other foods

    OTTAWA, Feb. 27 /CNW Telbec/ - Similar to other staple foods, like bread
and grains, the cost of manufacturing one of Canada's favourite foods, pasta,
is being dramatically affected as a "perfect storm" of agricultural conditions
continues to impact the cost of manufacturing this pantry staple.
    Severe weather conditions, the shift of acreage planted for corn crops
instead of wheat crops to develop into ethanol fuel and an overall drop in the
availability of the key ingredient in pasta - durum - have combined all at the
same time to drastically affect the pasta industry.
    Pasta manufacturers around the world are seeing a unique combination of
forces that have resulted in their actual hard costs of production rising
substantially, according to the Canadian Pasta Manufacturers Association
(CPMA). Droughts in Australia, extremely wet weather in parts of Europe, and
very dry conditions in North America have resulted in poor or smaller crops of
durum wheat. Added to that was the low amount of carry-over durum inventory
left from the 2006/2007 growing season as many farmers switched their crops
from durum wheat to corn crops in response to environmental needs to meet the
growing demand for ethanol fuel.
    All of these factors have combined to create the low availability of
durum which has driven the pricing to record levels. Durum wheat is the main
ingredient in pasta and the cost of durum has increased from approximately
$4.90 a bushel in 2005, $5.40 a bushel a year ago and steadily upwards
throughout 2007 reaching a plateau of $21.00. This escalation continues, as
prices have increased in 2008 so far to $23.00 - $24.00 a bushel. According to
the CPMA:

    "When the hard cost of producing pasta has skyrocketed like this, there
    is a drastic effect on the pasta industry. In 40 years, the pasta
    industry hasn't seen anything like this and no one expected the durum
    price to climb as high as it has and as fast as it has."

    The CPMA is hoping that Canadian farmers will expand their plantings of
durum this year to help alleviate the problem.
    However, the Canadian Wheat Board (CWB) reports that the durum market is
in an undersupply position in 2007-2008. And according to the CWB:

    "Production problems caused by adverse weather in any of the durum
    growing regions of the world, compounded by very low stocks, could push
    prices higher once again."

                                   CWB Grain Marketing Report - January 2008

    This means that pasta manufacturers have had to pass the price increases
along to their customers. Since last fall consumers have seen price increases
at the grocery shelf level and with a household penetration for pasta of 88
percent, most Canadians have been impacted.
    Not just pasta companies but other food manufacturers also are
experiencing soaring costs for ingredients:

    "Wheat, soybean oil, cheese, coffee, cocoa and a host of other
    commodities are well above their 10-year averages."

                                                   Reuters, January 31, 2008

    "At the end of the day, pasta continues to be one of the most affordable
food products out there for Canadians. A family of four can still have a
nutritious, tasty and filling meal with pasta as the basis", says the CPMA.
    Therefore, when it comes to purchasing pasta, consumers should focus less
on the price of this grocery staple and more on the nutritional and health
benefits of pasta. Grain products like pasta provide a significant supply of
the energy our bodies need and represent an important part of a healthy diet.
    The Canadian pasta industry, along with the Canadian Wheat Board and the
Baking Association of Canada, sponsors a health communications program "Grains
- they're essential". Grains, including pasta, supply essential vitamins and
minerals, including thiamine, riboflavin, niacin and folic acid and iron. And
whole grain and whole wheat pasta are an important source of fibre in our
diets. Visit this site to discover more information (www.grainsessential.ca).

For further information:

For further information: Don Jarvis, Pasta Manufacturers Association,
(613) 235-4010, Fax: (613) 235-5866, www.pastacanada.com

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