Maybe you cultivated a love for sourdough during lockdown or enjoy eating cereal for a midnight snack. Perhaps (like many people), both are true.
Either way, many Americans rely heavily on wheat. According to Statista, in 2021, the United States consumed 127 pounds of wheat flour per capita, and for a good reason. Grains are an integral part of the Food Pyramid model of healthy eating. The USDA even recommends 6-11 servings of grains every day.
But this dietary staple is becoming increasingly difficult to access — and pricey. Ukraine and Russia are some of the top exporters of wheat globally, and the conflict between them has made wheat tougher to get. According to agricultural analytics expert Gro Intelligence, Russia is the largest exporter and second-largest wheat producer in the world. Ukraine is close behind, among the top four largest exporters, reports CNBC.
The outlet also reports that in March 2022, wheat futures clocked in at a staggering $10.59 per bushel in America — a 7.62% increase and the highest price in fourteen years. And these prices aren’t predicted to go down any time soon.
Combined, Russia and Ukraine are responsible for 29% of wheat exports worldwide, reports FOX Business. FOX warns that any further eliminations in grain supply could drive food prices even higher. “Depending on how this comes out and how long it goes, wheat farmers [in Ukraine] may not be able to plant spring wheat, corn, and other things,” says American Bakers Association president and CEO Robb MacKie, via CNN. “So, they might go a year without any crops.”
Sal Gilbertie, Teucrium Trading’s chief investment officer and president, explains that the fear of anticipated food insecurity has prompted several countries’ governments to preemptively ban or limit grain imports from Russia for the upcoming winter, per MarketWatch. Worldwide, countries that usually rely on Russian wheat exports are already preparing backup plans for managing without them.
Since other countries’ reliance on Russian exports (like grain and oil) is directly linked to their well-being and subsequent growth, J.P. Morgan predicts the Russia-Ukraine conflict to raise inflation worldwide. In fact, the bans have already started. Russia announced a partial restriction on grain exports from March 15 to June 30, says Gro Intelligence, further diminishing already inaccessible wheat resources. The ban will prevent members of the Eurasian Economic Union (EAEU) from importing Russian wheat, barley, corn, and rye.
It isn’t just Eurasian countries being affected by the wheat inaccessibility. According to The Guardian, world wheat prices in spiked by a whopping 19.7% in March 2022
The Food and Agriculture Organization‘s monthly food price index reports that cereal prices reached a record high in March. Continued limitations on grain exports in Russia and the uncertainty of U.S. crop conditions based on fertilizer scarcity kept prices high. National Association of Wheat Growers head Nicole Berg says she doubts whether her crops yield will be able to stay on par with the rising price of wheat and business expenses, via Marketplace.
After an 11% increase in grocery prices from 2021 to 2022, more and more American families are flocking to local food pantries to meet their needs, reports FOX Business — and that’s just because of inflation. Meat, poultry, fish, and egg prices are 13% higher than in February 2021, and cereal and other grain-based products are up 7.7%, per CNBC. That doesn’t even take into account the impending wheat scarcity vis-a-vis the Russia-Ukraine crisis.
In March 2022, the USDA launched a $250 million initiative to stimulate American farmers and offset the imbalance of foreign imports in the agricultural marketplace. The goal is to eliminate the impact of recent high fertilizer costs and deter competition. Even if wheat prices continue to rise, purchasing more grains from U.S. farmers will lessen the blow of this new export scarcity.