There are a few things you have to understand about these figures. The first is that only 15% of the retail price is the price of wheat. The rest is shipping, processing, packaging, waste, advertising, and profit. You can actually work out how much each bit actually adds to the price by looking at the price at each step. For example, if you look at wholesale wheat flour prices, you are looking at about $3-400 per tonne.

The reality is that distribution is the vast majority of the cost and each entity that touches the product along the way wants a big markup. Money costs and each party wants a return on investment, not a fixed return.

So, if we replaced fertiliser and pesticide with something that costs $400 instead of $40 per tonne of wheat, then the price of the wheat will go to $530. Ideally that will result in a retail price of ~$1500 (about a 25% increase), but in reality it's likely to be at least double.

Personally, I think this is worthwhile -- especially if the extra $360 per tonne would allow smaller farms and provide more jobs in the farming industry. I don't think it is realistic for 2 main reasons. First I have no idea if even $360 would be enough. Second, large corporations and rich people have a very vested interest in continuing the current trend of moving all of the price into distribution. These distribution channels can be controlled relatively easily and provide rent for them. It also keeps the world food price below the level that traditional farming can support. This means that rich countries can dismantle the agriculture industry of poor countries and then control them. I encourage anybody interested in this kind of thing to look at the conditions attached to government loans/subsidies to poor countries that are used to buy food. When you start looking at this stuff, you are playing with big players who have lots to gain/lose and who aren't going to give up anything easily.

I would expect the opposite. Wheat was worth a record-high ~$380/tonne back in 2008 and what happened was that the biggest farmers went spend-crazy on land, preventing the existing small farms from growing, and completely pushing thoughts of any new farm operations right out the window. We're still suffering the effects of that as price of land has yet to come down with the price of the crop.

> and provide more jobs in the farming industry.

I'm not sure that lack of jobs are really an issue in the farming industry, to be honest. There is already said to be a farm labour shortage as-is. I farm in Canada, so those are the numbers I'm most familiar with, but the news reports that there are 60,000 vacant farm jobs available. Other reports indicate that farm jobs have one of the fastest growing wages in the country (which I realize technically invalidates there being a shortage, but labour shortage has come to mean something other than shortage).

A big reason why agriculture has been pushing the boundaries of automation is a result of how hard it is to find labour. Especially skilled labour.

Anyway, as you seem to be a farmer, please let me convey my utmost respect. Seriously, thank you for being a farmer. We need more people like you.

That is interesting, because the exact opposite is true of my neighbours. Growing up, there were eight farm families clustered fairly close together. In all but one of those cases, the next generation (all still under 40) have become heavily involved with, if not completely taken over, their family's farm. And in that remaining case, the grandson is starting to take the same role.

The age statistics can be a little misleading as farms are multi-generational businesses, but they usually only count the primary farm operator for statistical purposes. Which, for legacy reasons, tends to be the oldest person still involved. In many cases there will be someone waiting in the wings to take that spot when retirement comes.

> I have no idea what's going to happen in 10-20 years and it worries me a lot.

I am less so. If there truly is a lack of young farmers, 2008 will happen again. Meaning that the food price will rise, and people will get all excited about the fortunes to be made. 2008 has already changed attitudes about farming. It was fascinating to watch people go from "why would you ever want to do that?" to "how can I become a farmer too?" over the span of those months. Farming suddenly became 'cool' as soon as there was money to be made. There has been far more interest from young farmers since that time, from what I can observe.

But people want to be farmers (i.e. the owner), not farmhands. Being a farmhand is still looked down upon, leading to lack of interest from labour. Interestingly, that could maybe even result in smaller farms down the road if automation doesn't solve the problem first.

Why would they?

(I get $15 from brief research; but even at $20 or $25, seasonal work with no benefits isn't a great job)

Coupled with the fact that the most productive farming regions in Canada have the lowest unemployment rates in the country, there is no reason why anyone has to settle for a farm job. They can get a job almost anywhere. Employers in these agriculture communities are desperate across the board for labour, not just those involved in agriculture.

Anyway, the economy is fundamentally self-correcting. I don't see there being anything to worry about. I'm biased as a small farmer, but I don't see slowing down the big producers as a bad thing.

Isn't that the exact definition of shortage? Prices rise because demand excess supply at the previous price.

That price is rising should invalidate the idea of a shortage, but labour shortage seems to have come to mean a situation where an employer has made their desire to hire known, but received no suitable applicants.

It is, yes, and ultimately says the same thing. I prefer the alternative phrasing as I think it more clearly explains the mechanisms, especially when people sometimes confuse demand to mean 'I want something'.

> Capped prices is one potential cause, but demand also isn't always very elastic and this can cause shortages on it's own.

I don't see it being contradictory. In an ideal model of inelastic demand, the demand never wanes no matter how high the price goes. However, price cannot continue to rise infinitely, so you have technically created a situation where price cannot rise again. It is still the price not being able to rise that characterizes the shortage in this case.

I did not mean to suggest that the government is the only thing that can cause prices to stop increasing. It was just one example.

It is interesting that the distribution, not production, dominated the prices since ancient times. 2500 yeas ago in Mediterranean transporting wheat 100 km over land doubled its price compared with price at a sea port which was already quite higher than production. In a bad year when local crop failed rich citizens prevented widespread hunger by buying enough extra bread overseas.