Ramen a leg: noodle prices heat up as wheat supply goes to pot
The world’s hundreds of millions of noodle eaters face a rise in the price of their favourite meal as producers look set to heap surging wheat, energy and transport costs on to consumers.
Factors ranging from the war in Ukraine to droughts and floods in the past year have combined to cause a price squeeze that could see the cost of wheat rise 30% this year in China, while also adding to already rising prices in South Korea and Japan.
In China, the world’s largest consumer of noodles, food inflation is rising at the quickest pace for almost two years as large cities such as Shanghai open up after lockdowns.
Widespread floods in the country’s wheat belt in 2021 have caused a shortage of the basic ingredient of noodles, exacerbated by supply chain problems and now the war in Ukraine.
Prices of refined flour are already up more than 10% in China since the beginning of the year, to record highs, according to data from Mysteel, a China-based consultancy, and may rise further if wheat costs keep climbing.
“Food flour prices have basically stabilised at the moment,” a trader with a major milling plant in China told Reuters. “But higher wheat prices will eventually be passed on to end products.”
Mama Lai and her husband have run their food stall in a small Taipei street market for more than three decades, but she has rarely seen such high price increases.
Wearing a face mask and a backwards baseball cap, Lai doles out dish after dish of noodles and soup for about 60NTD each ($2) to queues of customers.
“Compared to past decades, I feel the noodle prices have increased a lot more in the last two to three years,” she says. “It keeps going up. I didn’t really feel the price increases until the last five years.”
The price of wheat had already risen sharply due to the coronavirus pandemic and snarl-ups in the global supply chain. But the war in Ukraine has seen the price almost double from November when it was about $260 per tonne to about $475 per tonne in midMay this year.
Andrew Whitelaw, an analyst at Thomas Elders Markets in Australia, said Russia’s invasion of Ukraine took 30% of global wheat exports off the market at a stroke.
“There’s your supply shortage,” he said. “A big chunk of the cost of noodles is clearly wheat so it causes the price of noodles to rise. In bread production the cost of wheat accounts for about 10-15% of the price, but in noodles it’s potentially higher.”
Noodles are a staple for millions of people around the world, but especially in Asia. According to the World Instant Noodles Association, there are 290m servings of instant noodles eaten every day, which means 106.4bn servings a year.
China is the number one consumer with 44bn servings in 2021, followed in second place by Indonesia on 13bn serves.
The government in Jakarta is so concerned about a potential noodle shock that its economics minister raised the issue at the summit of the world’s movers and shakers in Davos last month, while shortages of buckwheat are also pushing up the cost of Japan’s famous soba noodles.
There is also concern about price rises in South Korea, which is the biggest per capita consumer of instant noodles in the world. South Korea has seen the price of wheat imports rise sharply this year, topping $400 per tonne in May for the first time in 13 years.
The Korea Consumer Agency said that the price of the country’s popular dish kalguksu, or hot soup with flour noodles, rose 8.7% in March to a record high of more than 8,000 won (just over US$6). Other popular noodle dishes such as naengmyeon and jajangmyeon also rose steeply in price. The national statistics office said on Sunday that its index measuring the cost of eating out rose 4.2% from December to May.
Instant noodles are also very popular in Japan but the shortage of buckwheat – a less common grain – is causing concern because it is needed to make soba noodles.
With no end in sight to the war in Ukraine, the squeeze on prices could last for some time, according to Dr Medo Pournader, a supply chain expert at the University of Melbourne, who identified a witches’ brew of interlinked problems as the cause.
As well as the loss of exports from Ukraine and Russia, the supply of fertiliser from Russia and Belalrus to grow wheat has also been disrupted by the war, and rising energy prices have made production elsewhere more expensive.
“Then there are logistical problems that started during the pandemic with ports closed in China and backlogs at many other ports,” she said. “So all together it’s a huge amount of problems cascading between each other from food production to fertiliser, and energy to logistics.”
Back in Taipei, Mama Lai says she has tried to keep price increases to a minimum but times are getting tough for everyone.
“The price increase is still in an acceptable range for my customers,” she says. “I didn’t increase the price for many years. We earn less but we don’t lose money. My stall is for the working-class people…many are regular customers.”