Thursday , October 6 2022

Wheat

Summary:
Will the war in Europe affect availability of wheat, one of the staple foods of the world? One of the economic successes of the last two decades is an increase in the production of wheat which enabled stable average global consumption per capita (at around 68 kg. per year) and a slightly increased used as feed (close to 20% of total production). This was possible because of a surprisingly fast increase of yields per hectare (graph). Source: FAO-AMIS And, of course, because total area stayed ore or less the same. Both of these developments are to quite an extent caused by increases in yields and area in Ukraine and Russia. How will the war affect this? Today, I attended a webinar about this. Main points: it’s clear that the 2022 harvest in Ukraine will be severely compromised,

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Will the war in Europe affect availability of wheat, one of the staple foods of the world? One of the economic successes of the last two decades is an increase in the production of wheat which enabled stable average global consumption per capita (at around 68 kg. per year) and a slightly increased used as feed (close to 20% of total production). This was possible because of a surprisingly fast increase of yields per hectare (graph).

Wheat

Source: FAO-AMIS

And, of course, because total area stayed ore or less the same. Both of these developments are to quite an extent caused by increases in yields and area in Ukraine and Russia. How will the war affect this? Today, I attended a webinar about this. Main points: it’s clear that the 2022 harvest in Ukraine will be severely compromised, whatever happens. Sunflower oil production facilities have been bombed into oblivion… Also, even when there still is quite a stock of food available, logistics are a problem. The sheer volume of stocks means that transport by road and rail won’t suffice. Also, Ukraine has broad gauge railway tracks, which causes problems when large volumes have to be transported by train to Poland or, especially, Romania. Even when these problems are solved, ships are needed to transport wheat to consumers around the Mediterranean. Increasing production elsewhere takes time. Using less wheat as feed won’t get it to the poor needing it, at least not in the short run. People will suffer and go hungry, at least in regions heavily dependent on wheat. One strange fact: Lebanon imports a lot of wheat. But the 2020 explosion in the harbor of Beirut damaged storage facilities meaning that stocks are very low). The increase of yields shows what’s possible. The rapid increase of exports from Russia and Ukraine shows the possibility to establish and invest new supply chains. But this will all take time. The short term outlook is not good.

A personal opinion: I can’t see how countries dependent on Russian and Ukrainian wheat can accept the present situation. There will be increasing pressure on Russia (a country with disastrous demographics, corrupt politicians and, as seems to be the case, a badly organized military) to back off and keep quiet, presumably by an EU which is more or less pressured into the role of regional hegemon.

Merijn T. Knibbe
Economic historian, statistician, outdoor guide (coastal mudflats), father, teacher, blogger. Likes De Kift and El Greco. Favorite epoch 1890-1930.

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