The war in Ukraine has set off a catastrophic humanitarian crisis and sparked massive disruptions to regional and global food systems. Wheat prices, already at highs not seen in more than a decade, are rising rapidly, with implications for food security in Eastern Europe and beyond.
“Russia’s invasion of Ukraine is already affecting food markets globally and will continue to do so for some time,” said Chris Barrett, professor of applied economics and management at Cornell University. “This drives up hunger and unnecessary human suffering far beyond the borders of Ukraine.”
Ukraine and Russia are major exporters of wheat and other agricultural commodities like maize, barley, and potatoes. In recent weeks wheat prices have hit 15-year highs due to disruption of exports from Russia and Ukraine. Globally, some wheat prices have increased roughly 80-90% from last year, according to Barrett.
Barrett says the war will disrupt wheat harvest in Ukraine and lead to a significant drop in its 2022 production. The disruption is already impacting future contracts.
“The big hit is felt – and felt soonest – by consumers in importing countries that had contracts with Russia or Ukraine that are now disrupted, so they have to pay a premium to replace the shipments they had counted on,” said Barrett, an agricultural and development economist and an expert on global food systems. He is a professor in the Charles H. Dyson School of Applied Economics and Management with joint appointments in the Departments of Economics and Global Development and the Jeb E. Brooks School of Public Policy.
Barrett said that farmers in the northern hemisphere – in Canada, the United States, France and elsewhere – are adjusting planting in response to higher prices and the prospect that they will remain high at least through harvest.
Those supply response will dampen price rises, he said, but prices are likely to rise quickly and settle slowly.
“Between the direct loss of supply due to reduced exports from Ukraine and Russia, the diversion of commodities into liquid fuels production in response to oil price rises, higher transport costs to deliver food to distant markets, and increased costs of inputs like diesel and fertilizers, food prices will certainly rise in the near term, and sharply in many countries,” according to Barrett.
“If growing conditions prove strong in 2022 in other major exporters (e.g., U.S., Canada, Australia, Argentina, Brazil, France) the temporary disruption of Ukrainian and Russian exports might not have a lasting and significant effect on wheat – or broader food – prices. But reduced flows from Ukraine and Russia make global markets far more vulnerable to droughts, floods or supply chain problems in any of the other major agricultural exporting countries.
“It’s a very bad time for the poor anywhere in the world to suddenly face food price shocks,” Barrett said. “Food price spikes aggravate the risk of political violence. It takes a perfect storm, but we had been edging closer to such conditions for some time, given extreme climate events and the pandemic. Russia’s aggression just shoved the world significantly further towards unrest in other countries already struggling to cope with droughts, floods, COVID, and their own political turmoil.”