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

How that wheat ends up in a loaf of bread 害羞草研究所� and why prices have soared this year 害羞草研究所� 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.

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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.

害羞草研究所淭hey害羞草研究所檙e developing varieties of wheat with protection against drought and insects and plant disease that are as high yielding as possible,害羞草研究所� 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.

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

害羞草研究所淥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.害羞草研究所�

When a new wheat variety is developed, it goes to a crop recommending committee 害羞草研究所� 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.

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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害羞草研究所檚 managed to reuse seeds for the last couple of years, he plans to buy new seeds next year.

害羞草研究所淚n the spring, we害羞草研究所檒l drive the semi over to the seed grower and pick up a load of fresh seed,害羞草研究所� Leguee said.

That害羞草研究所檚 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.

害羞草研究所淚 have direct input costs like seeds, fertilizer and chemicals,害羞草研究所� he said. 害羞草研究所淭hen there害羞草研究所檚 crop insurance, fuel, repairs, maintenance, machinery, land and labour costs.害羞草研究所�

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害羞草研究所檚 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害羞草研究所檚 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害羞草研究所檚 drought left wheat stockpiles at rock-bottom levels, BMO害羞草研究所檚 Goertzen said.

害羞草研究所淚t takes time for supply to level out and prices to normalize,害羞草研究所� he said.

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

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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害羞草研究所檚 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 害羞草研究所� a market price for wheat purchased and delivered today.

But farmers don害羞草研究所檛 set the price.

害羞草研究所淭he market tells farmers what the price is,害羞草研究所� said Smyth, the chair of Agri-Food Innovation and Sustainability Enhancement. 害羞草研究所淎 farmer害羞草研究所檚 costs are independent of the price.害羞草研究所�

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.

害羞草研究所淚 can choose to sell or not but I don害羞草研究所檛 get to set my price,害羞草研究所� he said. 害羞草研究所淚 could set a target price that害羞草研究所檚 maybe 50 cents above the market. The grain buyer might take it or might not, but then it will expire and I害羞草研究所檒l have to try again.

害羞草研究所淏ut at some point I just have to sell.害羞草研究所�

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

害羞草研究所淭here害羞草研究所檚 no central mechanism that dictates what prices are,害羞草研究所� Goertzen said. 害羞草研究所淚t is purely supply and demand. So it害羞草研究所檚 determined on a decentralized basis based on the behaviour of millions of different agents.害羞草研究所�

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.

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

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

害羞草研究所淭here害羞草研究所檚 a lot of missing grain,害羞草研究所� Goertzen said. 害羞草研究所淚t害羞草研究所檚 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.害羞草研究所�

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 害羞草研究所� a nearly 75 per cent increase. It has since dropped to about $8.60.

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Once a farmer sells wheat to a grain handler, it害羞草研究所檚 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.

害羞草研究所淚f a loaf of bread is up 50 cents, that害羞草研究所檚 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,害羞草研究所� he said. 害羞草研究所淓verybody in the value chain needs to succeed to have a loaf of bread on the kitchen counter.害羞草研究所�

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

In recent years, Canada害羞草研究所檚 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害羞草研究所檛 provide detailed breakdowns in their financial reports, making it difficult to confirm what the margins on food basics really are.

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

害羞草研究所淲heat markets are highly competitive and globally integrated,害羞草研究所� Goertzen said. 害羞草研究所淏ut by the time you get down to the retail level, there害羞草研究所檚 a little bit less competition and probably more pricing power if you害羞草研究所檙e a major food retailer.害羞草研究所�

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

害羞草研究所淭here害羞草研究所檚 a reason it害羞草研究所檚 a global staple,害羞草研究所� he said.

害羞草研究所擝rett Bundale, The Canadian Press