Government is concerned about the increased price of wheat on the international market but is hopeful that the local milling company will benefit from favourable contractual agreements with its parent company, says President Bharrat Jagdeo.

Questioned about raising wheat prices on Monday at the International Convention Centre, Jagdeo acknowledged that the price has skyrocketed by 70 percent over the last two months, and said the administration was concerned about this.

The President said that since the National Milling Company (NAMILCO) sources its wheat from its parent company, he was hoping that the long term contractual agreements would result in favourable prices. “I am hoping that they have procured…at a locked-in price for extended periods, so hopefully when the prices drop, because there is anticipation that the prices will come down again in the near future, that it will even out the situation,” Jagdeo said.

There has been a sharp rise in international wheat prices following drought in Russia, a huge producer and exporter of wheat.

Some 10 million hectares, or a quarter of arable land has been reportedly destroyed in Russia this year as the country experienced its worse drought in its history.

Recently, Russian Prime Minister Vladimir Putin created a stir by announcing that from August 15 it would ban grain exports to keep prices down at home and ensure there was enough feed grain for its cattle herd.

Rising wheat prices caused the biggest monthly spike in food prices in August since November 2009, the United Nations’ Food and Agriculture Organization (FAO) said yesterday.