As Russia’s invasion of Ukraine enters its second month, consumers already burdened by record inflation rates could soon see yet another spike in the cost of essential goods — this time groceries in particular.
Before the war, Russia led the world in wheat exports, earning billions each year while supplying nearly a fifth of the world’s grain. Ukraine, too, was a leading exporter, exporting more grain than all but four nations. However, as the bloody conflict continues, the two nations — which together account for a quarter of the world’s wheat exports — have begun keeping the product for themselves.
Ukraine announced recently they’ll be stockpiling wheat as part of their ongoing war effort, while Russia has cut off wheat exports to ex-Soviet bloc countries, among others, to “protect the domestic food market in the face of external constraints,” according to the country’s Prime Minister.
With roughly 25% of the global wheat supply essentially disappearing over the course of a month, prices on the remaining wheat have skyrocketed, and that’s bad news for consumers.
Over the past month, the grain market has seen such volatility that many farmers — despite having a product suddenly in short supply — are struggling to find buyers due to near-unprecedented spikes in the futures market of the commodity.
Brad Schaeffer, a commodities trader, explained the seemingly counterintuitive phenomena to The Daily Wire, noting that “It would seem good for [farmers], right? Because if you have something that’s gone up, in this case wheat… in theory they should do quite well. But they have to be able to offload it, and right now, that’s been the difficulty.”
As Schaeffer notes, the up and down nature of the price of grain has left many buyers wary of purchasing a good that could lose half its value by the time they attain it, and in turn, many farmers have been left with an expensive product in short supply that they can’t seem to sell.
In addition to wheat, fertilizer prices have also seen more than their fair share of volatility as the war in Ukraine disrupts supply chains and alters demand.
Russia, which supplies roughly ten percent of all fertilizer for American farmers, no longer allows such exports to the United States. As a result, some farmers have reported paying four or five times more for fertilizer this year than the last.
That spike will inevitably impact other products, according to Joel Griffith of the Heritage Foundation. “When you see Russia or Ukraine constrict the exports of fertilizer, that’s going to drive up prices on production across the globe. And we’re already seeing big increases in food. This is going to have an increase, not just on the price of wheat, but if we don’t have the fertilizer to the same quantities, it’s going to drive the price of corn, for instance, and a lot of our beef… So this is going to have a ripple effect throughout the entirety of our food supply.”
That means more bad news for consumers already frustrated with more expensive — and smaller — products.
Many food companies have attempted to address the rising cost of production by offering smaller portions without smaller prices, seemingly employing the strategy that a dollar price tag increase is less noticeable than a five percent size reduction.
For example, Gatorade re-designed its 32-ounce bottles, supposedly to be “more aerodynamic.” But that new bottle now contains 4 fewer ounces, for the same price as the larger one.
A small bag of Doritos now contains about 5 fewer chips than before after the company quietly shrunk the bags from 9.7 to 9.2 ounces each.
Schaeffer, who has been a trader since 1991, put it simply. “I’ve never seen anything like this.”
The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Daily Wire.