First drought, now war: Global wheat supplies in peril

 First drought, now war: Global wheat supplies in peril

Prices soaring are soaring, raising the risk of severe food shortages and hunger in some regions of the globe and threatening to further ratchet up food costs in the United States.

Combine harvesters drive across a wheat field during a summer harvest in Poltava region, Ukraine, on July 18, 2014.

March 12, 2022, 6:05 PM +07
By Evan Bush and The Associated Press
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. 

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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. 

Fertilizer costs are also rising,  driven by high demand and high gas prices. As the price of crops like wheat and corn rise, farmers try to capitalize and apply more nitrogen fertilizer. Many fertilizers are produced through a chemical process involving natural gas. About 75 percent of producing these fertilizers is actually the cost of natural gas, Welch said. 

“When the price of natural gas goes up, the price of fertilizer goes up,” said Ben Barstow, a farmer in southeast Washington, who will be fertilizing several crops this spring. “It’s going to be a bitter pill to swallow.” 

Herbicides and pesticides, which are tangled up in production and supply chain slowdowns,  remain in short supply and are priced high, farmers said.

Much of the western U.S. remains mired in drought, which has been made worse by climate change, according to recent research. Some regions have been particularly hard hit.  

In Washington state, last year’s heat wave and drought caused wheat production to plummet to about half of its total the year before.

“We’re still short on soil moisture,” Barstow said. “It’s typical farming stuff. You kind of choose what you want to worry about the most and let the rest of it go.”  

Welch said wheat prices and the impact of the war in Ukraine will remain murky for some time and will depend on how long the invasion lasts. In times of peace, Ukrainian farmers would now be preparing to plant their spring wheat crop. By late summer, they’d look to harvest the winter wheat that’s already been planted and is lying dormant now. 

“Will they have access to their fields, much less access to the inputs they need -- the fertilizer, fuel and seed -- to put a crop in?” Welch wondered. 

For Carstensen, it’s important to keep perspective. 

“All of us are complaining about inflation, but we don’t have bombs raining down nor family members being blown up,” he wrote in an email. “It’s a human crisis.”

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