The war in Ukraine is leading to the fastest rise in food prices on record, and with Ukraine’s ports closed for the foreseeable future, the problem is only going to get much worse.
The war has severely disrupted supply chains in the Black Sea breadbasket, where one-quarter of the world’s grain is grown. And with inflation already raging around the world, the UN fears mass starvation could be in the offing.
Ukraine is also a major producer of sunflower oil — a vital staple for the world’s poor. Without it, cooking oil will be in short supply.
Elsewhere, high energy and fertilizer prices are raising food-production costs, which means bigger grocery bills for the rest of us.
The food price rally is felt most in poor countries where groceries make up a large share of consumer budgets — and the fallout from Russia’s invasion has sent costs of basic foods like bread soaring. The United Nations’ World Food Programme recently said expensive staples in import-dependent Middle Eastern and North African nations are putting people’s resilience at a “breaking point.”
The surging costs are spurring some countries to hold off on imports, seek new suppliers or draw down local stockpiles, though that won’t be a long-term fix, said Erin Collier, an economist at the UN’s Food and Agriculture Organization.
“It’s basically kind of deterring demand,” she said in an interview. “That can only last for so long. Wheat is a staple food.”
One of the biggest problems isn’t necessarily the supply. It’s getting the grain to ports, loading it onto ships, and sending it off to other countries.
“Last year was a record wheat-producing year for the whole country,” said Dmytro Grushetskyi, an industrial farmer with nearly 30,000 acres of cropland near the central city of Uman who also runs an agricultural data company that monitors harvests in Ukraine, Russia and neighboring countries. “Ukraine is actually full of grain. Our stocks are full.”
“But now we can’t get the grain out,” he said, putting his finger on the problem that may lead to an enormous spike in grain prices and exacerbate hunger around the world, “which means Ukrainian farmers, and the rest of the world, are screwed.”
It’s hard to predict how this uncertainty will affect American agriculture. But there’s little doubt that the price of everything from a loaf of bread to a pound of hamburger to thousands of processed foods is going to go up — and fast.
A trader he works with at the Odessa port, Oleksandr Chumak, laid out the industry’s despondency in plain terms.
“There is nothing else to do but give the grain away to the army or as humanitarian aid. Ukraine, thankfully, will not starve,” he said. “But if we are talking about global food security, well, that is already a fragile system. Climate change, supply chain chaos, and now this war — in six months’ time, poor people will starve to death. I don’t think the world understands that yet. For their own sakes, movement of food through the Black Sea must be negotiated.”
Revolutions have started over grain shortages. Some countries in the Middle East — Egypt, Lebanon, and Pakistan — are highly dependent on Ukraine wheat for stability and are already unstable due to war or sick economies.
Unless something drastic happens to change the situation, we may see historic — and bloody — upheavals, the likes of which haven’t been glimpsed since the Reformation.
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