Soaring food prices and shortages are not new. They date back to Biblical times, and we hear about them all too often, but they are always out there -- never in our backyards. Now we’re being told that they can happen in America and may in fact be just around the corner.
How serious are these problems? Consider the following. According to the UN, food prices in February were 20.7% higher than they were last year. That’s a humongous increase in just one year and certainly among the highest ever recorded in the US. And if that weren’t bad enough, World Bank President David Malpass is warning that the world is facing “a huge food supply shock” as a result of the war in Ukraine. The combination of these developments is very worrisome.
Breadbasket Of Europe
Some people are surprised to learn that Ukraine exports so much food that it is called the “breadbasket” of Europe. Russia is also a major food exporter.
According to The Economic Collapse Blog, in normal times these two countries together account for nearly one-third of the world’s wheat and barley exports. Ukraine also supplies the EU with just under 60% of its corn, and together they export 75% of the world’s sunflower oil; both also produce other key components needed to feed livestock. This explains how the war has impacted the world’s food chain -- big time.
Savvy investors react quickly to news, and in this case the war has prompted them to buy commodities; gold, silver, and oil are just a few that have been on a tear.
More important, however, are the price of wheat and corn. Wheat jumped by 55% at the start of the war and has made new highs repeatedly since then; it is now approaching double the price it was before the war began. Corn has skyrocketed by 21% this year, and this follows a 20% increase last year.
Some analysts believe that the price of these grains could soon double, and that countries relying on Ukrainian wheat may experience shortages as soon as July. Whether they do or not, in the very near future we’ll all be paying much higher prices for bread, pasta, cake, and every other product that’s made with wheat and corn.
Related problems are also affecting the world’s food supply, and one of these is the price of fertilizers. “Fertilizer prices have tripled and will likely go higher, especially as Russia has halted their exports,” reports the website Based Underground. Already, supplies of these are down by 25-30%, it adds.
Food production in Ukraine is down sharply because many farmers have fled from the fighting or are involved in it. As a result, exporters have had to shut down. Russia, both the world’s largest wheat producer and exporter, has already limited exports last year to hold down domestic food prices.
Strange Events
The world’s stockpiles of food have been rocked by ongoing strange events including supply chain issues, labor shortages, and highly unusual weather, and these may set the stage for additional food problems.
By late summer, the world will need spring wheat, but Based Underground says those crops aren’t being planted sufficiently to feed the world and could become a “wheat apocalypse.”
Doing without luxuries is difficult enough, but doing without food is impossible. A person can’t remain calm when his stomach is growling from hunger, the pantry is empty, and the kids haven’t eaten all day.
The soaring price of bread helped bring about the French and Russian Revolutions. More recently, in 2011, it led to the Arab Spring -- intense rioting that swept through many countries in the Middle East. And now, Lebanon, Syria, Egypt, and Ethiopia are just a few of the countries facing serious shortages of wheat. Will history repeat itself?
Even major countries are affected. The agriculture minister of China said this winter’s wheat crop “could be the worst in history.” The US Dept. of Agriculture said 71% of winter wheat has been hurt by drought, while large areas of Australia had record flooding, which hurt their food production.
On March 4, Russia effectively banned all exports of fertilizer, and just a few hours later Hungary and other important grain producers responded by banning all grain exports. With the world facing food shortages, much higher prices, and greatly heightened tensions, not only are both antagonists in this war losers but so is the entire world!
The Bottom Line
Russia has seized important parts of Ukraine, but has paid an incredibly high price for that: Dozens of aircraft and helicopters were shot down, hundreds of tanks destroyed, and thousands of its soldiers killed, injured or taken prisoner. It is also a big loser in the PR war because of its attacks on civilians, maternity wards, hospitals, and orphanages.
The economic price also has been staggering. The ruble is now worth less than one cent, the Russian stock market has crashed, and the county is largely cut off from the world’s banking system, its assets frozen; the country is sliding toward a complete collapse.
Putin has also paid a high personal price, as protests against the war within and beyond Russia are growing, and he may even be losing his grip on power.
Years ago, some tenements on the Lower East Side were infested with rats. Some tenants tried coaxing them out; others picked up a broom and tried sweeping them out. But no one attacked them, because when the rats’ backs were up against the wall, they would fight and become ferocious.
The same idea may apply to Putin. Having suffered major disappointments on the battlefield, an economic disaster, and political isolation, he may feel his back is against the wall and become more dangerous than ever. He has already shown that he has no problem bombing the most vulnerable civilian targets, and has threatened to use the most horrible missiles and bombs in his arsenal. He should be taken at his word.
I’m very concerned that many of the world’s leaders are making a serious mistake. Rather than trying to out-macho Putin and pushing him to his limit, they should try to lower the tension level by offering more incentives for accepting a cease fire and resolving this crisis diplomatically. Having lost so much, Putin could decide that he’s been pushed enough and retaliate against the world with lethal weapons. My impression is that he doesn’t bluff.
It seems that the danger level in the world keeps increasing and no one knows what the next day could bring. Let’s pray for peace because the alternative is too terrible to think about.
Sources: abcnews.go.com; axios.com; basedunderground.com; bloomberg.com; economiccollapseblog.com; reuters.com; yahoofinance.com; zerohedge.com
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.