Will Russia’s invasion of Ukraine ignite a global food crisis?
The price of pasta, bread, cereal and other wheat products could soon be climbing at U.S. grocers similar to recent gas pump hikes in another repercussion of Russia’s invasion of Ukraine.
Combined, Russia and Ukraine are estimated to be responsible for almost 30 percent a third of global wheat exports. According to The Economist, wheat prices were already 49 percent higher than their 2017-21 average in mid-February due to a string of poor harvests and hoarding during the pandemic. Since the invasion on February 24, wheat prices have climbed another 30 percent.
Much like the impact on energy prices on the U.S. from the war, the U.S. doesn’t import much grain from Russia or Ukraine, but the disruption will create imbalances in stocks worldwide.
On March 9, Ukraine’s government banned the export of wheat, along with shipments of oats, millet, buckwheat and cattle, to preserve its food stocks amid the intensifying war. Exports from Russia face boycotts or sanction risks as well as turbulence shipping from a war zone.
The region also ranks among the top five exporters of many oilseeds and cereals, from barley and corn to sunflowers. Any low or inaccessible future harvests in Ukraine and Russia will weigh on the world’s food supply in the years ahead.
Another major food concern is access to fertilizer. Russia ranks as the largest supplier of key fertilizers ingredients, including natural gas and potash. Escalating fertilizer and energy costs threaten to further crush farmers’ margins globally.
Food and fertilizer prices had already spiked to all-time highs pre-war, thanks to strong demand, snarled supply chains and unpredictable weather patterns. The Labor Department last week reported annual inflation reached its fastest rate since 1982.
Import-dependent countries in the Middle East, South Asia and sub-Saharan Africa are expected to be particularly threatened by the food crisis, yet developed countries will also feel the pain.
“We’re used to a globalized system of trade to get all kinds of varieties of food,” Johanna Mendelson Forman, a professor at American University who specializes in war and food, told CNN. “People will see it in their pocketbooks, and they’ll see it in the grocery stores.”
- War in Ukraine will cripple global food markets – The Economist
- Russia’s war in Ukraine has driven up gas prices. Will rising oil costs increase food prices next? – USA Today
- World Agricultural Supply and Demand Estimates – USDA
- How will Russia’s invasion of Ukraine affect global food security? – International Food Policy Research Institute (IFPRI)
- The War in Ukraine Is Threatening the Breadbasket of Europe – Wired
- War has brought the world to the brink of a food crisis – CNN
DISCUSSION QUESTIONS: What obvious and less obvious fallout do you see on food prices as a result of the Russia/Ukraine war? What steps should grocers and food suppliers be taking to communicate pricing pressures to consumers resulting from Russia’s invasion of Ukraine?