Wheat War: Why Ukraine Conflict is Raising More Global Hunger Fears

By Lynnet Okumu / Published July 8, 2022 | 8:39 am




KEY POINTS

Because most African Countries largely depend on the wheat imports from the two nations, some such as Kenya and Ethiopia are already facing it hard due to the fallout of the ongoing conflict.

 


Wheat prices

KEY TAKEAWAYS


Recent studies show that wheat and wheat products account for one-third of the average national cereal consumption in the Eastern Africa Region, with the highest consumption per capita in Djibouti, Eritrea, and Sudan. Yet, 84 percent of wheat demand in the region is met by imports.


As the war between Russia and Ukraine rages on, global supplies and export optimism for US grains such as wheat, corn, and soybeans have tightened, with wheat prices jumping as high as 34 percent since the war began in February 2022.

The war that has lasted for five months now continues to threaten a big portion of the world’s wheat supply and has sent prices on a dizzying ride to new highs. A factor that has cut down the purchasing power of consumers across the globe.

Market experts now believe that if the current situation continues then several countries depending on the European Nations for grains will likely face hunger.

Why is Wheat important?

Wheat and many of its products form an integral part of consumers’ everyday meals.

Milled wheat, which is generally now wheat flour can be used to make various products ranging from bread to pasta, to deserts among other.

As much as everybody loves it, not all can produce wheat, and thus the over-dependence on some countries.

China is the world’s top producer but is also a major importer of the commodity, followed closely by Egypt, Indonesia, Nigeria, and Turkey.

Russia, the United States, Australia, Canada, and Ukraine are the world’s top exporters.

Why the Rapid Surge in Wheat Prices?

This time, the war in Ukraine is accelerating a price surge that started earlier as a result of unfavorable weather in key producing countries, the rapid economic recovery after the COVID-19 pandemic, and the growing costs of energy and fertilizers.

How did the War worsen the Situation?

Russia and Ukraine account for nearly 30 percent of world wheat exports and 18 percent of corn, most of which is shipped through Black Sea ports that are now closed.

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The war has severely disrupted shipments from Ukraine, one of the world’s largest food suppliers. The country is also a major supplier of corn, barley, and sunflower seeds, which are used to make cooking oil – goods that can’t reach world markets because Ukraine’s ports are blocked.

Among the hardest hit by trade, restrictions are developing economies in Africa, Asia, Latin America, and the Middle East.

How has this Affected Africa so far?

Recent studies show that wheat and wheat products account for one-third of the average national cereal consumption in the Eastern Africa Region, with the highest consumption per capita in Djibouti, Eritrea, and Sudan. Yet, 84 percent of wheat demand in the region is met by imports.

Because most African Countries largely depend on the wheat imports from the two nations, some such as Kenya and Ethiopia are already facing it hard due to the fallout of the ongoing conflict.

Even as the continent continues to worry about the spike in commodity prices that is likely to dent growth, commodity markets are, however, on track for their biggest weekly gains in years.

Since Russia is one of the world’s biggest exporters of key raw materials, from gas and crude oil to aluminum and palladium, the exclusion of supplies from the country due to sanctions has sent African traders and importers into a frenzy.

In lower-income countries like Somalia, the effects of Russia’s war in Ukraine on the food supply are worse. Skyrocketing prices for grain and other commodities are pushing Somalia to the brink of famine.

Is Wheat the secret Weapon Steering the War?

According to the US Secretary of State, Antony Blinken, Russia’s blockade is blackmail and a deliberate strategy by Russian President Vladimir Putin to force the rest of the world to give in to him.

“In times of war, big producing countries hold the fate of others in their hands,” Parmentier said.

In the long run, it is the dependent countries that suffer the real consequences.

What does the future hold for the rest of the world?

According to the US Department of Agriculture, global wheat production is forecast to reach almost 775 million tons in 2022-2023, 4.5 million lowers than the previous year.

The department added that the reduced production in Ukraine, Australia, and Morocco will “only partly” be offset by increases in Canada, Russia, and the United States.

In recent weeks, however, wheat prices have fallen as harvests have started. Australia, one of the biggest wheat exporters, is expected to produce a bumper crop in the coming months.

Although the economic situation is still tight, countries across the globe including Kenya are hopeful that the recent change will bring relief to their many hurdles.

As of July 1st, 2022, wheat commodities had dropped to $8.419(993.86 shillings) per bushel from a high of $13.11(1,547.64 shillings) in March 2022.

In Kenya, a kilo of wheat is now ranging between 21.16 and 48.83 shillings. Wheat products such as wheat flour have shot up to more than 200 shillings.






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