Food prices rise to highest EVER levels

Food prices

According to the FAO (Food and Agriculture Organisation) price index, world wheat prices increased by 19.7 percent in March as the conflict in Ukraine disrupted Black Sea exports.

Before the Russia/Ukraine war, the Black Sea region was responsible for more than a quarter of all global wheat exports. Russia and Ukraine collectively produce nearly one-third of all the wheat on the planet. Taking that off the global trade market due to the war and the impact on food security, pricing levels and availability across the world will be unprecedented in these modern economic times.

Unless Ukrainian farmers can get out into the fields because they are almost certain to be targeted by artillery or air strikes, it is unlikely that they can make any significant plans for this year’s harvest. In addition, they are a significant, global exporter of wheat, and the world doesn’t even really know if crops are getting into the ground right now?! Ukraine exports oilseeds and cereals to the rest of the world, and it takes time for markets to rebalance when an entire country is removed from the global food supply equation.

The war in Ukraine is producing a lot of volatility and anxiety in global commodities markets, and last week, peace talks between the two countries prompted both oil and wheat prices to decrease in anticipation of a ceasefire.

The war has cut off access to ‘cheaper’ wheat normally supplied from Ukraine to The African Nations, Asia and The Middle East.

“The higher price quotations are especially concerning for countries already dealing with other crises, such as conflict, natural disasters, economic conditions, or, as is often the case, some combinations of those,” said an FAO spokesperson, adding that countries with low incomes and food shortages may find it difficult to pay higher prices.

Increases in price are particularly visible in countries with the highest share of disposable income spent on food. In these situations, the most vulnerable are more likely to skip meals, buy less nutritious foods, or engage in other coping mechanisms, all of which will have long-term consequences for their health and well-being.

Prior to the invasion, prices were already reaching record highs due to restricted global supply, according to Joseph Glauber, the senior research fellow at the International Food Policy Research Institute (IFPRI). “Projected stock levels were already low relative to recent years, which means that there are few supplies available to buffer the impacts of reduced exports coming from the Black Sea,” he said.

According to the International Food Policy Research Institute (IFPRI), Ukraine and Russia accounted for 12% of the global calorie trade.

Food price volatility, according to Glauber, is felt worldwide. Countries that were heavily reliant on wheat from Russia and Ukraine may have to rely on wheat from The EU, The United States, Australia, Canada, and Argentina.

“Many of these nations are in North Africa and the Middle East, where wheat accounts for up to 35% of total calories consumed, and the majority of wheat is imported, much of it from the Black Sea,” he said.

The Black Sea region has also been an important supplier of sunflower oil, with export restrictions causing vegetable oil prices to rise by about a quarter since February. Russia and Ukraine are also very important sources of sunflower oil, supplying about 80% of the global market. Due to rising demand, prices for palm, soy, and rapeseed oils also soared.

The World Food Programme (WFP) said that the impact of banned shipments would be felt in numerous East African nations, including Kenya, Ethiopia, Somalia, and South Sudan, which are already suffering from severe drought and conflict.

According to the World Food Programme, the price of indigenous goods had increased by a quarter on average over the previous year but had climbed by as much as 92% in Sudan.

It also cautioned that East African countries are completely reliant on fertiliser imports (fertiliser price is 3-5 times what it was a year ago!), which Ukraine and Russia are both major suppliers of, and that any disruption would have a negative impact on local output and push food prices even higher.

Will bread and wheat-based items be more expensive in the United Kingdom?

According to the Federation of Bakers, 80% of the wheat used in the UK is cultivated locally. This does not, however, mean that Britain is immune to worldwide price increases. “Between February 16 and March 3rd, the quotation for wheat on the London futures market climbed by 28%,” stated Alex Waugh, director of the UK Flour Millers Association.

“This substantial spike in market prices comes after previous hikes in 2021 as a result of relatively poor harvests. It is unavoidable that they will eventually result in higher consumer pricing for a variety of items that rely on grain as a primary component.”

Consumers on lower incomes would be hurt the hardest, according to Dr Peter Alexander, a Global food security lecturer at the University of Edinburgh, who told ITV News that food makes for a rather big amount of their spending.

Will this have an influence on other industries in The UK?

Because almost half of the UK’s wheat is used in animal feed, the price of meat, milk and other animal-derived items may also rise, according to Dr Alexander.

“It’s not bad to talk about biscuits, spaghetti, and bread,” he continued, “but it’s not the complete narrative.”

Will bread and other wheat-based items become more expensive all around the world?

Although the United Kingdom imports very little wheat from Ukraine and Russia, numerous African, Asian, and Middle Eastern countries do.

Russia’s invasion of Ukraine will further disrupt global markets, have short-term negative effects on global grain supply, and have long-term bad consequences for producers as they start a new planting season by affecting natural gas and fertiliser markets. This might exacerbate already-high food price inflation, posing a major threat to low-income net food importers, many of whom have suffered a rise in malnutrition rates in recent years as a result of pandemic disruptions.

Online sources:,,,,,

All opinions and views expressed or suggested by the Digital Zeitgeist
are not necessarily the same opinions and views held by or suggested
by GPM-Invest plus any and all partners, affiliates, parties, or third parties
of GPM-Invest.

Any type of media distributed by GPM-Invest IS NOT financial advice.
Please seek advice from a professional financial advisor.