Amid record-high inflation and gas prices, Americans may soon have another economic crisis to worry about at the dinner table: a wheat shortage.
President Joe Biden and his administration have already blamed Russian President Vladimir Putin and his invasion of Ukraine for soaring gas prices and general economic mayhem. Now, with Russia and Ukraine responsible for exporting more than one-quarter of the world’s wheat supplies, shoppers in the U.S. may start to feel the pain of the war at the grocery store, too.
In 2019, Ukraine and Russia combined to supply about 25.4% of the world’s wheat, according to the Observatory of Economic Complexity. Russia is the world’s largest wheat exporter; Ukraine ranks fifth. While that’s a staple crop for both countries, it isn’t the only one of importance — in total, the International Grains Council estimates that the two countries account for about one-quarter of the entire world’s grain trade.
Now, much of that grain isn’t going to make it out of Ukraine and Russia on schedule because of Putin’s war of aggression. Russia has banned grain exports to Europe until at least the end of August, in a retaliatory measure to western sanctions on the Kremlin. Ukrainian farmers are not only fighting to save their country, but are short on goods like fertilizer and fuel — Russia is the world’s biggest fertilizer exporter — meaning this year’s harvest of wheat will only be a fraction of a typical amount. (RELATED: Putin Takes Aim At Key Commodity, Raw Material Exports On The Heels Of Biden’s Russian Oil Ban)
To the extent that Ukrainians can continue to grow food, it won’t be going elsewhere. To prevent starvation in cities under Russian siege, Ukraine has temporarily banned the export of commodities like wheat and oats so it can feed its own people. Russia is compounding the problem by blocking shipping lanes in the Black Sea and the Sea of Azov. Ships that can get through are frequently facing astronomical insurance costs due to the war, further clogging up transport.
Russian naval forces appear to have closed shipping traffic in and out of the Sea of Asov. @LLIntelligence data showing no movement through the Kerch Strait with a heavy build up of vessels anchored in the southern anchorage. Full story via @LloydsList soon pic.twitter.com/ShBKwBU67c
— Richard Meade (@Lloydslisted) February 24, 2022
This is one of the ways a war halfway across the world will hit Americans hard, and potentially hit Biden’s poll numbers harder. Similar to how a reduced supply of Russian energy is helping spike gas prices in the U.S., the price of wheat — and thus all of the hundreds of food products that use it — has skyrocketed since the war began.
The cost of wheat has surged 44% since Sep. 1, according to the S&P’s wheat index. That’s resulted in wheat prices hitting a 14-year high this week, with plenty more room to climb if the war rages on. Inflation is already hammering American households, and food and energy costs are the biggest driver. Food prices and food at home costs rose 1% and 1.4%, respectively, in February, the biggest jumps since the start of the COVID-19 pandemic in April 2020. That contributed to a rise in the Consumer Price Index of 7.9%, the highest single-month jump since 1982.
The wheat shortage will hit the developing world and impoverished people even harder, which will trickle back onto America as well. Wheat accounts for about 20% of total human caloric consumption on the entire planet. Much of the Middle East and North Africa, including many countries that are politically unstable or have a history of bread riots, such as Egypt, get a sizeable majority of their wheat from Ukraine and Russia.
Other countries, like Lebanon, import mass amounts of flour from countries like the United Arab Emirates and Turkey. Those countries mill that flour with Russian and Ukrainian wheat, meaning the knock-on effects will extend far beyond direct wheat importers, to every country on the globe.
Food riots were a direct contributor to the Arab spring in 2011. Protests of Ukrainian grain shortages have already broken out in Iraq. A cursory understanding of world history will show that destabilization in places like Libya, Egypt and Iraq has a direct knock-on effect to the U.S. (RELATED: Biden Spokesman Ned Price Defends Hypocrisy On War Crime Investigations Because The US Can Investigate Itself)
The humanitarian toll is potentially huge as well. The United Nations has asked Canada to increase its grain production and export, warning that millions of people could starve if the shortage of Ukrainian and Russian grain is not made up for elsewhere.
Critics of the Biden administration have pleaded with the president to allow for more domestic energy production, from drilling oil to fracking, to suppress gas prices that are rising due to Russia’s invasion. Similarly, some economists believe the president can take some action to stem the pain of the wheat shortage.
Actions like deregulating agricultural red tape to allow for more planting in a short time period, or the subsidization of wheat prices, could alleviate the issue, some economists say. But Biden must act fast, as wheat is planted either in the fall for a spring harvest, or in the spring, which is rapidly approaching. So far the administration has failed to keep inflation in check and to counteract Russia’s fuel supply issues, but maybe the wheat shortage will be different.