First drought, now war: Global wheat supplies in peril

The pandemic already had food prices rising.

Now, Russia’s war in Ukraine — between two top wheat producers and in a region known as Europe’s breadbasket — has sent wheat prices soaring, raising the risk of severe food shortages and hunger in some regions of the globe and threatening to further ratchet up food prices in the United States.

The instability leaves many U.S. farmers, particularly those in the drought-stricken West, scrambling as costs soar for fuel, fertilizer and other key agricultural components.

The Ukrainian government banned the export of wheat and other food staples this week, 

a move that Roman Leshchenko, Ukraine’s minister of agrarian and food policy, said in a Facebook post, was necessary to “meet the needs of the population in critical food products” and prevent a humanitarian crisis. 

Combined, Ukraine and Russia make up about 30 percent of global wheat exports, said Mark Welch, a professor in the department of agricultural economics at Texas A&M University.

So for the Ukrainian government to restrict exports ”put a point on how serious the situation is,” Welch said. 

From 720 million to 811 million people faced hunger in 2020, according to a recent report by the Food and Agriculture Organization of the United Nations. 

World food prices, already surging because of the pandemic, reached an all-time high in February, when they increased by about 2.1 percent, according to the U.N. Wheat is a global commodity and war-related shortages are making prices more volatile. The United States exports about half of its wheat supply. 

“We will feel that domestically, in terms of food inflation or food price pressure,” Welch said. “Globally, of course, that situation becomes much more severe for countries that do rely heavily on grain imports.” 

Countries in the Middle East, Northern Africa and Asia rely heavily on imports from Ukraine and Russia. About one-third of Ukraine’s total wheat exports go to three countries: Egypt, Indonesia and Bangladesh, according to the International Grains Council. 

Some countries, like Australia and India, are having banner years for wheat production, which could help stem the worldwide impact of the war in Ukraine.

“There’s some opportunity for shifting of trade flows and sources we don’t normally think of that can buy us some time to see how long and deep this conflict is or if it expands,” Welch said. 

The war’s effects — and fast-changing markets — has U.S. wheat farmers’ heads spinning.

“It’s just kind of a shock for the grain system,” said Mike Carstensen, a dryland wheat farmer in Washington state. “It’s not all rosy down on the farm.” 

While prices have risen significantly since the conflict began, so have the costs of things like fuel, fertilizer, herbicides and pesticides. 

“The cost of our inputs have gone crazy as well. Part of that is an energy component to this area of conflict,” Carstensen said. 

Sanctions against Russia have driven up oil and gas prices, which increases the cost of driving tractors in the field and transporting wheat to major markets by truck or, as is common in the Pacific Northwest, by barge. 

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