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Danger of starvation with a 40 percent increase in the price of wheat after the war threatens Ukraine’s vital supplies

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Rising wheat prices as a result of Russian invasion of Ukraine will risk food shortages and even famine in the Horn of Africa.

Pressure is also being put on the price of everything from a sliced ​​pan to pasta and ready meals.

Ukraine is Europe’s largest wheat exporter. Add in Russia’s own grain exports, which also reach world markets via the Black Sea, and the war means that 25 percent of world wheat exports are now under threat.

In global markets — including the largest in Chicago — contracts to buy wheat for delivery in the coming months have soared 40 percent over the past week, a record and a bet by traders that deliveries will be significantly lower will.

A food industry expert, who declined to be named, said food inflation in Ireland is heading towards double digits – almost double what consumers previously felt.

A 10-piece increase would add 12 to 20 cents to a sliced ​​pan, and the impact on higher-priced groceries would be greater in real terms.

Professor Edgar Morgenroth, an economist at DCU Business School, said Ukraine supplies a large part of the world’s wheat and it is also of high quality and is therefore used extensively for milling flour.

Irish consumers will inevitably face higher prices, but how much is still impossible to estimate, he said.

“In our case, we can probably partially substitute other cereals in this country and ultimately buy them at higher prices.”

For poorer countries, already hit hard by inflation, the situation may be far worse. “Depending on total global wheat production this year, there could be a potential famine.”

The Horn of Africa region, including Ethiopia and Somalia, is particularly at risk.

The war means uncertainty in almost every aspect of supplies from Ukraine, as fundamental as how much wheat can be sown and harvested this year.

Corn and sunflower oil are also affected. Important ports in southern Ukraine are closed, said Prof. Morgenroth.

Russian wheat is currently unsanctioned, but buyers in world markets fear they could face financial sanctions if they deal in grain.

Higher grain prices threaten to push up the cost of meats raised on animal feed, such as poultry and pigs, while Russia’s role as a major supplier of fertilizers will have a direct impact on the food supply.

Fertilizers are not subject to sanctions, but Russia’s own government is urging exporters to cut supplies to put pressure on the outside world.

Roland French, food sector analyst at Davy Stockbrokers, said the sharp rise in wheat costs alone may have had a limited impact on consumer prices, but comes when prices were already high.

Energy prices — for ovens and for transportation — can cost food producers more than wheat, but those fuel costs are also high and rising, he said.

Most food producers will not be immediately affected by higher wheat prices in financial markets as they have orders and large retailers will pass some of the higher costs back to food manufacturers to keep consumers.

“There is no escape, we are in an inflationary environment and this is being exacerbated by the war in Ukraine,” he said.

In Ukraine itself, logistics and transport links no longer work as they should due to the war. If the fighting continues, no winter wheat can be planted.

https://www.independent.ie/world-news/famine-risk-with-40pc-hike-in-wheat-price-after-war-threatens-vital-ukraine-supplies-41413935.html Danger of starvation with a 40 percent increase in the price of wheat after the war threatens Ukraine’s vital supplies

Fry Electronics Team

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