Inflation shocks from Russia’s invasion of Ukraine are already being felt in the grain and energy sectors and could soon affect US growers and consumers. Oil and gas prices are rising, while grain prices are rising to multi-year highs. With Black Sea shipping blocked, the war is likely to prevent plantings in Ukraine or embargo Russian crops.
U.S. farmers and food makers worry everything from fertilizer to animal feed and bread to beer will soon cost even more. Here is American Farm Bureau Federation Senior Economist, Veronica Nigh.
“The Ukraine is the breadbasket of that part of the world, and, just when we look at the value of Ukrainian exports of wheat and corn, in 2020, they exported almost 8-and-a-half billion dollars of those two products, alone.”
Making Ukraine the world’s fourth-largest exporter of both, and the largest exporter of sunflower seed oil. Nigh warns global supplies will be squeezed.
“I can’t imagine trying to farm through war. So, that would be a multi-year disruption to Ukraine exports, even if it was a fairly short-lived exercise.”
And then, there’s Russia.
“Russia is a significant supplier, particularly of wheat to the world, you’re looking at 8 billion dollars in wheat exports from Russia. That’s going to have reverberations throughout the market that impacts everyone.”
Fertilizer prices meantime could soar even further, with Russia a key natural gas supplier and one of the biggest fertilizer exporters. That will squeeze corn profits even more, cause animal feed costs to soar, and pandemic-hit beef and pork prices to rise further. The conflict will impact agriculture and food supplies worldwide, as farmers decide what to grow and how much.
(From the National Association of Farm Broadcasters)