Ukraine War Panics Global Food Markets

The UN Food and Agriculture Organization recently warned that that a possible food crisis would drive commodity prices up, while crops are at risk from the disastrous war in Ukraine. The cost of wheat and other agricultural products was already high due to unpredictable weather and the COVID-19 pandemic.

Ukraine, along with southwestern Russia, has long been known as “Europe’s breadbasket” thanks to the region’s rich dark soil. Called locally chernozem or black earth, it is considered among the most fertile grounds in the world. The region accounts for about 15% of the world’s wheat production and nearly 30% of world supply, France 24 reported.

Now we are experiencing a disruption that was impossible to predict by market analysts and observers – manmade catastrophe. 

Reporters on the ground say that during planting season, some Ukrainian fields are empty. No new grain has been sewn and no wheat harvest is expected in summer, when crises would be felt at most. 

While the war is raging, ports have been blockaded, agricultural workers can’t access the land and farmers can’t get the vital supplies they need to continue growing food.

Wheat is not the only affected crop. Both countries are major exporters of corn, maize, barley, rye and sunflower seeds. This means higher prices for livestock food, which in turn could drive the cost of beef and dairy products. 

In retaliation for Western sanctions, Russia recently banned grain and fertilizer exports, which means which this will drive up prices of nearly all crops in the coming months as farmers scrabble to source alternative supplies. 

“In many ways, this situation is harder to rectify than the oil supply crisis. While oil prices have fallen back, wheat prices still trade near record levels, a telling sign of what is likely to come this spring and summer,” said the Washington Post.