A new wave of inflation is starting in the United States as the Russia-Ukraine war enters a critical stage.
Most Americans, especially those who are living on monthly paychecks, are feeling the burden of unprecedented food prices.
Wheat Prices Hike Will Strain American Buyers
With the wheat planting season arriving in Ukraine, and countries worldwide still heavily dependent on this wheat, the food shortage seems near.
The intensifying war made the yield of this season questionable, which will eventually impact food prices in the United States.
Speaking about this crisis, supply chain expert Dan Varroney stated the timing of the wheat shortage would be a disaster for Americans; it comes at a time when inflation is already reaching 10 percent.
As per the Observatory for Economic Complexity, Ukraine and Russia produce almost 25 percent of global wheat combined.
There's a reason Ukraine is nicknamed "the breadbasket of Europe.” The country produces about 10% of the world's wheat, 14% of its corn, and half of its sunflower oil. All of that is now under threat because of the Russian invasion, @JacobSoboroff reports. https://t.co/BlwL27gzbu
— MSNBC (@MSNBC) March 22, 2022
Although both of these countries have no direct wheat export to the United States, this would definitely create a global shortage, which would bring prices higher.
Varroney, who explained the global supply chain at length in his latest book, stated the surge in input costs of various commodities would force manufacturers to pass the burden onto consumers.
As global oil prices are also rising exponentially, this will worsen the problem for American buyers.
This is due to the fact that planting, harvesting, storing, and transporting food require energy, which is getting expensive, Varroney mentioned.
As oil is involved at every step of the supply chain, a tiny bit of price rises everywhere, which eventually results in a big price hike.
The most impacted sector in this regard is the baking industry, which is getting its server hit in the persisting crisis.
This has prompted the CEO of the American Bakers Association (ABA), Robb MacKie, to say high demands are impacting the whole industry.
Apart from wheat, barley and oilseeds are also the products of Ukraine, which are further choking the baking sector, MacKie noted.
New Chances for the Biden Administration?
However, stakeholders are optimistic the Biden administration can avert the crisis before it is too late.
Mackie suggested ABA should work with the EPA to stop converting food oils to clean diesel products. This way, the demand for the oil would be reduced, and the prices could come back to normal.
As per MacKie, the demand for bakers should be addressed first, so the food crisis can be avoided.
Likewise, Mackie believed the United States Department of Agriculture (USDA) should allocate some reserve lands for growing wheat to bridge the upcoming food gap proactively.
However, this recommendation does not mean that highly sensitive wetland areas should be opened for wheat production, Mackie added.
If the Ukranian farmers can't plant there will be no harvest, as one of the largest world suppliers of wheat and other grains this will lead to a worldwide shortage, and famine in the most vulnerable countries. No Rye=No Whiskey 🥃, No Barley=No Beer 🍺No Wheat= No Bread🍞
— ༺♥༻ Olaf Peacock ༺♥༻ (@OlaftheP) March 19, 2022
Those who are already facing the brunt of the pandemic are the ones who would feel the strain badly.
According to the Bureau of Labor, food prices increased by almost eight percent in the last year, which is the highest increase since 1981.