As Russia turns one of the world’s largest grain-producing nations into a battlefield, Americans battered by inflation may find an even greater strain on their budgets.
Before the war, Ukraine had been one of the world’s top grain-producing regions. But now, it could be months — it may even be next year — before harvest can return to normal.
And that means Americans will pay more, Robb MacKie, the president and CEO of the American Bakers Association (ABA), said, according to Fox Business.
“If you take, essentially, one of the top wheat-growing regions out of production for a year, that’s going to have a ripple effect — a substantial ripple effect,” he said.
“I think that as we look forward, American shoppers should expect that, unfortunately, their grocery bills are going to go up and, unfortunately, their restaurant bills are going to go up,” MacKie said.
“And unfortunately, this is going to impact the most vulnerable in our society, many of whom are still feeling the impacts of the pandemic.”
Even though Ukraine does not export directly to the U.S., without its grain feeding global demand, prices will rise.
“Food markets are globalized, so, to a certain extent, it’s impossible to avoid the impacts of disruptions like this,” said Caitlin Welsh, the director of the Global Food Security Program at the Center for Strategic and International Studies.
“I think that these types of disruptions remind us the extent to which we, you know, the global economy and global agriculture trade is intertwined with the rest of the world.”
“I think that the disruptions due to this war are only going to continue upward pressure on food prices,” she said.
“I don’t expect that to happen immediately in the U.S. It could take a couple of months for that to play out. And I don’t think that it’s going to happen to the same extent in the U.S. as it has in other countries that relied much more on imports to meet their food needs. But I do expect it to have an impact, and it will last at least as long as the war lasts,” she continued.
MacKie noted that “a lot of ingredients come out of Ukraine, particularly wheat, oilseeds, barley and a number of other crops.”
“The challenge is that that [region] is one of the top three wheat growing areas of the world. And if we’re taking that out of production, which it looks like if the conflict goes much longer, that is going to happen. That’s going to have a significant impact on the price of U.S. and Canadian wheat, which is what U.S. bakers primarily use,” he said.
Dan Varroney, a supply chain expert and founder of Potomac Core, said the timing increases the impact of the shortage of Ukrainian grain due to Russia’s invasion.
“It comes an absolutely horrible time for American consumers because we’re looking every day at inflation almost reaching 10 percent,” he said. “Last month’s figures were close to 8 percent. And that means that consumers, including those that are living paycheck to paycheck, are going to pay more for food.”
Varroney said rising energy costs will also hurt consumers.
“Everything from getting food from the ground, to producing it, to storing it, to delivering, it all involves energy,” Varroney said. “Natural gas is utilized to manufacture those foods. Then when you get past that? And you get into logistics, you’ve got a store, these food products, so there’s gasoline to ship, and there’s electricity to store.”
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