Experts predicted a shortage of wheat after Russia’s invasion of Ukraine. Why didn’t this happen?

When Russia invaded Ukraine last February, experts at various outlets warned that wheat supplies could be cut off, which could cause a grain shortage. Shortages will then lead to higher prices for basic foodstuffs, from flour to pasta and bread. Together, Russia and Ukraine export more than a quarter of the world’s wheat.

According to the United States Department of Agriculture (USDA), most wheat is imported by countries with limited production capacity, and the largest growth markets for wheat imports are North Africa and Sub-Saharan Africa, the Middle East and Southeast Asia.

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But the prediction of a global wheat shortage has not materialized. Last year, Ukraine harvested 20 million tons of wheat, which is about 25% below the average. Decreased wheat exports from Ukraine were offset by increased production elsewhere, says Monika Totova, an economist at the Food and Agriculture Organization of the United Nations (FAO). Overall wheat production increased globally in 2022, driven by increased exports from countries such as Canada and Russia, which have had above-average production for several years.

In addition, lots of wheat left Ukraine. According to the July agreement, the resumption of Ukrainian grain exports through the Black Sea allowed shipments of merchandise food exports from three Ukrainian ports. According to the United Nations (UN), the November decision of the parties to extend the agreement contributed to the fall in world wheat prices by 2.8%. Negotiations to extend the agreement will begin this week.

How the invasion of Ukraine led to fears of a global wheat shortage

When the war began, Totova said it was not clear how the wheat supply would reach growth markets. Therefore, wheat prices have skyrocketed, creating problems for countries dependent on imports. (In fact, wheat prices were rising even before the war due to pandemic-related supply chain disruptions and extreme weather.) To date, wheat prices have fallen from their highs but remain high. “Globally you don’t have a deficit, but that doesn’t mean there aren’t problems at the country level,” she said.

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Several countries dependent on wheat imports, including Congo, Ethiopia and Sudan, are facing a famine crisis. Some countries also have certain economic problems, including high energy prices (although prices are falling) or spending a lot of resources on the COVID-19 pandemic, Totkhova said. The US dollar strengthened late last year, pushing up the cost of dollar-denominated goods for these countries. All of these factors affect how much wheat countries can afford to import, she said.

This year may be a different story. While Ukrainian farmers were able to sow wheat before last year’s harvest, she said, they don’t have all their usual resources.

How will wheat production change with the ongoing war?

On the one hand, Ukrainian farmers did not have enough liquidity, which limited their spending on inputs such as fertilizers, Totova said.

Since the land is still contaminated with mines and the railroads and roads are in poor condition, production will still be well below average. Winter wheat sowing for the July 2023 harvest was 40% below the 2022 level, according to the Food and Agriculture Organization of the United Nations (FAO).

However, wheat producers in Ukraine have gained confidence that they will be able to export their products, Tim Luginsland, sector leader at the Wells Fargo Agri-Food Institute, said in an email. “So they will plant as many as they can.” He added that this year the US could increase wheat exports if the US gets normal rainfall.

Impact of the Russian-Ukrainian War on Global Food Security

War is one of many factors contributing to the deterioration of global food security. East Africa, for example, continues to experience multi-year droughts in addition to political instability. Before the outbreak of war in Ukraine, the FAO estimated that the number of undernourished people in 2022 was 733.9 million. According to Totova, according to new baseline forecasts, in an environment of higher prices, this number has increased by about 10 million people. “International prices, on average, are making things worse for a number of reasons, including the ripple effects of the war in Ukraine,” she said.

“The world functions in a very interconnected way,” she said, pointing out how the war had driven up energy prices, pushing prices up around the world and affecting interest rates. But when it comes to agriculture, the biggest unknown remains the weather, especially as weather events have become more extreme.

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