What will happen to the “bread basket of Europe” once the shooting in Ukraine stops? Russia is the largest and Ukraine is the fifth largest exporter of wheat. Together they account for 29% of the world’s annual wheat sales. The war has disrupted not only the harvests in Ukraine but also the ability of Russia to ship its wheat to other countries.
This will cause food crises through much of the world. Two of the most volatile regions, the Middle East and North Africa, are the most dependent on these two sources. But food prices everywhere will be under pressure.
Before Russia invaded Ukraine, wheat prices were already 49% above their 2017-2021 average, The Economist reports. They’ve gone up another 30% since the war began.
The war will cut supply in several ways. Obviously, it will reduce harvests in Ukraine. But even if Russian wheat fields continue producing, the conflict will make it harder to export its grain, as noted above.
Importantly, it will affect harvests elsewhere because Ukraine and Russia are also major suppliers of farm fertilizers. Ukraine’s supply is being pounded by war, while Russia’s is getting frozen by economic sanctions.
But what about U.S. farmers? The United States is the world’s second-largest wheat exporter. Couldn’t American agriculture replace a shortfall in supply, especially if higher prices for their crops spur our farmers to grow more? It’s apparently not that simple.
American farmers would certainly value higher prices for wheat. The problem lies in the higher cost of producing it. Already paying record prices for fertilizers, farms must also deal with the rising cost of the diesel fuel that runs their tractors and other machines.
High fertilizer prices are already affecting what farmers choose to grow. Americans, for example, usually plant more corn than soybeans. This year, however, the balance has changed to favor soybeans. The reason: Soybeans generally need a quarter of the fertilizer that corn does. As for wheat, it falls somewhere in the middle in fertilizer use.
Aggravating matters, wind and dry conditions have left America’s winter wheat crop in its worst shape on record, according to the Department of Agriculture. This follows a poor harvest in 2021 that forced American wheat stocks down to their lowest level in 14 years. In any case, almost all the winter wheat was already planted when the war began. And severe drought is being forecast for the Western Plains, America’s bread basket.
Even if the violence against Ukraine stops through a ceasefire or, better, a resolution, that country will have a hard time restoring its agricultural might. First off, its farm infrastructure is being destroyed. Tractors and other farm machinery have been used to stop Russian tanks. And the Russians have been bombing agricultural buildings full of tools and other farm equipment.
There are also questions of how much ordnance is now buried in Ukrainian fields. That would put farm workers in danger of setting off explosives, much as happened in Europe after World War II. Ukrainians are already fearful of Russians having booby trapped dead bodies on the streets with bombs.
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April 09, 2022 at 02:52AM
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