THE IMPACT OF THE UKRAINE WAR ON WORLD WHEAT PRICES
So the real concern is if Ukraine can't harvest and ship the wheat that they are meant to reap this summer, and that will cause grain prices, wheat prices, to stay high or rise further. And that could make it really hard for some countries to keep buying grain. So the expectation is that if the war continues into the summer and we're talking June, July and onward, there's a real possibility that these crop shortfalls and reduced exports will keep prices really high. And the fear is that it will deepen food insecurity in countries in the Middle East and parts of Asia and North Africa. And these are places where wheat is a big part of the stable diet. And the concern is just that if prices get high enough, consumers won't be able to afford this important grain.
What can world governments do to help address the shortfall, Star Smart?
Governments are trying to make up for the low supplies in the ways that they can. We've seen steps from Ireland and the European commission, even the Biden administration announced last week that they asked Congress for $500 million to help boost US crop production. But these are really small measures. I mean, the market is already telling farmers to plant more of these crops and there's going to be real limits. So, for example, drought is a big one across the world, but particularly in the US, that is taking a toll on the US wheat crop. So there are real limits.
In Ireland, they launched a program to incentivize farmers to grow more crops, particularly wheat and oats and barley. They're wanting to reduce their dependence on the grain that they import for animal feed.
The European has similarly adopted measures that will allow farmers just temporarily to grow crops on land that they fallowed for conservation purposes, but it's not enough to fill in the gaps. And, in the Northern hemisphere, where there's a lot of wheat that's growing, that crop was already planted last fall, so it will be harvested this summer. So it's going to be awhile before farmers in the US go to plant their next big wheat crop.
And so Onyee, there's just a limited amount that farmers in other regions will be able to do in the short term.
