Food Security (Even Beer) Will Suffer from Ukraine War

The Riches of UkraineThe stupid, senseless war in Ukraine is causing massive suffering. For anyone who is paying attention, that much is perfectly clear. Stepping back from the dire, immediate humanitarian crisis, economists are fretting about the shocks coming from oil prices. But the shock to the global food supply will also be huge. Food security will almost certainly suffer from the war in Ukraine.

Feel like crying into your beer? That will likely get more expensive, too.

A Breadbasket for the World

The problem is quite simple. Ukraine and the region all around it is a hub for global agriculture and trade. Taken together, Ukraine and Russia supply 29 percent of global wheat exports.

Kees Huizinga farms in central Ukraine. He told the Financial Times:

“If farmers in Ukraine don’t start planting any time soon there will be huge crisis to food security. If Ukraine’s food production falls in the coming season the wheat price could double or triple.”

Right now, grain prices are extremely volatile, with wheat futures setting an all-time record high yesterday. At the same time, Australia is expecting a record harvest, so prices are likely to fluctuate wildly while global supply chains deal with the chaos that comes from war in one of the world’s key breadbaskets.

And then there’s barley, the favored grain for making beer. Again, the situation is still playing out, but Ukraine accounts for 20 percent of barley for beer, says President Jim McGreevy of the Beer Institute. So it’s hard to imagine that beer prices won’t be spiking.

Grain’s Essential Role

Grain plays an essential role in providing basic nutrition to lower income countries. Bangladesh, Sudan, Pakistan, Egypt, and Turkey all have been getting more than half of their grain from Ukraine and Russia.

Already because of the fighting, people are running out of food in Ukraine. It might be a distant memory, but famine killed as many or more people in World War II than military action did.

But the impact will not be confined to Ukraine. Putin’s power trip in Ukraine will almost certainly ripple out into the world’s food supply. Ukrainian farmers are now fighting for their lives instead of planting crops for the coming year. Huge amounts of the fertilizer needed to grow crops all over the world come from Russia. But that supply, too, will shrink dramatically and thus put a dent in food production everywhere.

Odds are very good that this war will be catastrophic for global food supplies.

Click here and here for further perspective.

The Riches of Ukraine, painting by Oleksa Novakivskyi / WikiArt

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March 9, 2022