Warning Signs Emerge of Possible Food Shortages And More Inflation

Farmer plowing dry field

Recent articles and projections are warning of a food shortage, increasing global risk of food insecurity, and even higher costs for food. Is there any truth to this? We’re tracking down data and even interviewed a farmer to get his thoughts.

Let’s jump into the details…

Is A Food Shortage On The Horizon?

There’s been a lot of talk about this in some groups but less talk about why. Let’s take a look at what we know.

Less food is being grown 

According to this article from Seed World and the USDA’s report, (PDF) wheat, corn, and soybean’s global outlook is a growing concern with fewer exports of each being expected. Wheat is especially a focus.

People know Ukraine as the “Breadbasket of Europe” because of its extensive agricultural exports (especially wheat). With many Ukrainian farmers busy fighting Russian invaders, the planting season has been pushed to the back. 

The USDA is predicting that 3 million fewer tons of wheat will be grown globally this year compared to a normal year.      

Farmland may be half of what it was before the invasion. Ukrainian Agriculture Minister Roman Leshchenko expects only 7 million hectares of wheat production now compared to 15 million hectares before the invasion.

Ukraine has already stopped exporting multiple crops (including salt, sugar, and meat) since the war began. 

Ukrainian farmers are still doing their best to plant crops, even if that means pulling a missile out of their field with their tractor. We’ve adjusted what normal looked like for a pandemic, can we do it again for a possible food shortage?

Sanctions will impact global imports and exports

Ukraine isn’t the only country to produce a lot of wheat. Russia also grows and exports a large amount of wheat. As sanctions continue to pile up, Russia is increasingly cut off from the world.

Wheat percent by nation
Global wheat market share as of 2020.

Other nations’ reliance on their goods, including cude oil and natural gas, continues to be a key focus. Banning food and oil exports can decrease how much other nations are directly helping finance the invasion. Not every country will take this route, though.

So far, many European nations have refused to stop importing Russian oil. Doing so could lead to catastrophic consequences, especially for Germany, which imports much of its oil and gas from Russia. Currently, the European Union and Germany are weighing their options including banning imports or phasing them out. 

Grains and oil from Russia will probably still find their way to some markets, especially ones with a softer stance on the invasion. 

Higher prices and less fertilizer for crops 

Russia and Ukraine produce large amounts of fertilizer. Their current situation is already affecting farmers this year (see the next post). 

Russia and Ukraine export 28 percent of the world’s supply of nitrogen, phosphorus, and potassium.

Fertilizers can greatly increase crop yield. According to Crop Nutrition, some studies show applying appropriate fertilizer can increase yield by as much as 40 to 60 percent.

What would a food crisis look like?

Countries closer to Ukraine may feel the effects of this crisis more than others because of their heavier reliance on the nearby crops. However, as the world struggles to feed its people, each nation may decide to export less food to keep more food available in their home country. 

Countries will be affected differently, some more than others

Seed World points out that developed countries are more likely to rely on grain products in their diets than developing nations and may feel the effects more than other countries.

Not every nation imports from Russia or Ukraine at the same rate. The European region relies on crops from Ukraine much more heavily than we do in the United States.

However, if countries fear not having enough to eat they may ban food exports. Ukraine has already banned exports of some foods and Indonesia just announced it’s banning cooking oil exports this week.

With the increasing scarcity comes increasing prices.

More expensive food

The USDA is “expecting” a 3-4% increase in grocery prices and a 5.5-6.5% increase in the price of eating out this year. This is on top of the 8.6% higher price we are paying now compared to February of 2021.

Wheat prices soar after the invasion of Ukraine

We interviewed a farmer (see part 2)

This article got a little long for one post so check out the next article for more and some takeaway points.

We interviewed a farmer to get his thoughts on the subject.
Are they facing shortages?
How much higher are prices going?
How much has the price of wheat gone up already?

See part 2

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