Tegan Tuesday: War threatens food supplies, drives up prices

In 2020, world production of wheat was 731 million tons (1.7 trillion pounds), making it the second most produced cereal after maize. Since 1960, world production of wheat and other grain crops has tripled and is expected to grow further through the middle of the 21st century. Global demand for wheat is increasing due to the unique viscoelastic and adhesive properties of gluten proteins, which facilitate the production of processed foods, whose consumption is increasing as a result of the worldwide industrialization process and the westernization of the diet. https://en.wikipedia.org/wiki/Wheat

Many people who are more informed, more educated, more aware of global politics than I, have discussed what’s going on with the Ukraine-Russian war. I’d like to pull the conversation back from the — equally valid! — discussions on nuclear or fossil fuel power, or NATO involvement, and talk about food. Specifically, wheat. The Ukrainian flag is a light blue band over a yellow band, and represents a blue sky over a ripe wheat field. Ukraine has been called the bread basket of Europe, and Ukraine is one of the five largest producers of wheat around the world. Unsurprisingly, wheat is a major part of Ukrainian culture, as well. One of the traditional plants for the Ukrainian flower crown (vinok) is wheat, worn during a harvest festival by an engaged woman, as good luck and honor, among other uses of wheat as a cultural icon. Ukraine and Russia together make up one-third of all wheat production and export globally. Because of the war, Ukraine is not harvesting winter wheat right now, nor planting any new crops (sunflowers and corn for oil are also supposed to be planted now).

Because of the war, Ukraine has no one to spare to transport or sell the wheat already harvested. Because of the war, Russia is banned from selling their wheat due to economic sanctions and countries making political stances against the Russian aggression and empire-building. Because of the war, people around the globe will be starving:

Grain prices were already rising before Russia invaded Ukraine, and recent days have seen unprecedented further gains as two of the world’s biggest producer are at war.

Wheat closed in Chicago at the highest price ever on Monday. Benchmark corn and soybean futures have each surged by 26% this year. Those kinds of increases in food-staple commodities have been associated with social unrest throughout history.

“Remember, bread riots are what started the Arab Spring, bread riots are what started the French Revolution,” said Sal Gilbertie, CEO of Teucrium, the largest U.S. exchange-traded fund issuer focused solely on agriculture funds. “It is a biblical event when you run low on wheat stocks. You won’t see a global food shortage. Unfortunately, what you’re going to see globally is that billions of people might not be able to afford to buy the food.”

Gilbertie doesn’t think the world will run out of wheat — but prices could continue to rise, and that will be most problematic for vulnerable global populations. “Ukraine dominates what they call the sun-seed market,” he said. “Sunflower oil is a major component of cooking oil and food, and you see palm oil rising, and soybean oil rising. That is a big deal, especially for the poorest of the poor, where cooking is a big part of the daily budget.”

Global food prices rose to a record high in February, led by vegetable oil and dairy products, according to the United Nations Food and Agriculture Organization.

Wheat traded in Chicago, the international benchmark, has jumped more than 50 per cent since Russia invaded Ukraine. Prices rose to as high as $13.40 a bushel on Friday, while European milling wheat in Paris hit a record of €406 per tonne.

North American wheat harvests were curtailed by drought this past year, as were South American soybeans and corn. Severe weather all around the globe has impacted global food commodities, and food insecurity was already on the rise in many areas. The countries most reliant on Slavic wheat imports are in Africa or the middle east. Some particular countries are Egypt, Cameroon, Democratic Republic of Congo, Lebanon, Libya, Nigeria, South Sudan, Sudan, Turkey, and Yemen — all of these whom have a fair amount of unrest even with full access to foodstuffs. Sudan in particular has already been suffering from wheat shortages due to the closing of ports during protests. But countries like Lebanon are buying 96% of its wheat consumption from either Ukraine or Russia, Egypt buying 85%, Turkey buying 78%, and the others listed above with similarly high amounts of annual consumption supported from Slavic wheatfields. Some countries, like Egypt, have attempted to buy imports from countries like France, but France has not been able to keep up the demand. Lebanon doesn’t have their expected stockpiles, as the explosion in the port of Beirut in 2020 destroyed its only large grain silo. Turkey, in particular, needs wheat not just for it’s populace, but for it’s own exports: Turkey is a major producer and exporter of pasta, flour, biscuits, and semolina. Without the raw materials to make such items, Turkey’s economy will also suffer, along with everyone else in the region.

The price of bread has been a politically explosive issue in Egypt as on several occasions in the past 50 years it triggered angry protests, to which the Police usually responded by firing shots over the heads of demonstrators. Particularly strong protests were staged in March 2017 in Alexandria, Giza and many other areas after the government cut the supply of subsidized bread amid an economic crisis.

Also during the so-called “Bread Intifada” in January 1977 violent protests broke out and the Egyptian security forces killed 70 people and wounded more than 550 protesters, but in the end the government was forced to re-institute the subsidies.

Bread subsidies are considered a red line among Egyptians and people in other countries in the Middle East, as they are a staple for every family in the region. Bread is sold at very low prices, for example, a subsidized flat loaf costs 0.05 Egyptian pounds, less than one US cent, which covers only a small part of the real cost of producing it and the government coffers cover the rest.

It’s not just the general populace that is worried here either. The bakers who rely on the imported flour are the face of the government-subsidized bread for most families, and they are equally worried about what the future holds.

Tunisia’s government remains tightlipped on the flour shortages, even though the evidence is already apparent. Across the country, bakeries are shutting early, or rationing supplies, with anger growing among owners.

“There’s been a problem building for months,” said Hazem Bouanani, a baker. “Normally, we buy flour from mills and the government will reimburse us. For 10 months, we haven’t seen any payment.”

And that’s just wheat. Russia and Belarus also provide a significant amount of the world’s fertilizers, and the corn and soybeans grown in Ukraine feed livestock. People are going to starve. With a third year of a global pandemic, many industries failing or businesses failed, extreme weather patterns (flooding in Australia as we speak!); most people don’t have the funds to weather an additional hardship like severe food shortages.

This century is likely to be one instance of food insecurity after the next. I know that I will be working hard to have a large enough pantry to cushion any sudden surprises, considering how to eat more locally, and I think that I should look into how to support my local food banks. For those who wish to support those relieving the food insecurity of Ukrainian refugees, and many other global catastrophes, World Central Kitchen is usually one of the first organizations on the scene, and they provide hot food for all who can come.

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  1. John Morales says

    There are subsidies to keep land fallow.

    Some even ostensibly for land conservation.
    Whether that stands up to scrutiny is beyond my pay grade.

  2. R. Simons says

    Winter wheat is not being harvested at present in Ukraine. It survives through the winter, right now it will be starting growth and will be harvested in a few months time. But I agree that the global situation regarding grain supply is serious.

  3. lumipuna says

    Right now it’s freezing and late snowfall in Ukraine – though probably not enough freeze for the muddy spring fields to carry Russian tanks. Farming season begins when the fields are not only thawed but dry enough to carry farming machines. I’d estimate in a few weeks most Ukrainian farmers will need to start tending their fields and planting spring crops. Even if the war ends by then, its aftereffects might still very well disrupt farming.

  4. lumipuna says

    To be clear, I’m not in Ukraine, though I’m in eastern Europe and have some expertise on agriculture. I pay attention to weather reports and related analyses with regard to Ukraine.

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