According to Scott Irwin, an agricultural economist at the University of Illinois, the Russian invasion of Ukraine could so deeply devastate global grain markets that we could witness the biggest supply shock we’ve ever seen. The economist said on Twitter on Wednesday that tens of millions of acres of grain production are at stake because of the war.
“I am convinced that the Russia-Ukraine war will be the biggest supply shock we have ever seen in global grain markets,” Irwin said.
Stating that we need more acres of agricultural land to be cultivated by farmers around the world in 2022, Irwin said, “Nothing can be done except raising the price of grain in order to balance supply and demand in the short term.”
Together, Ukraine and Russia account for more than a quarter of global wheat trade and a fifth of global corn sales. Prices for these staple crops are rising amid concerns about supply disruptions at a time when global food prices are already hitting record highs.
Even before Russia’s war with Ukraine, food inflation was already plaguing consumers on a global basis. While extreme climatic conditions made it difficult to grow crops, labor shortages and high transportation costs have wreaked havoc on supply chains. The world’s grain stocks are also not adequate, so prolonged interruptions in supplies from Russia or Ukraine have the potential to shake up markets in the coming years.
Translation: Cem Cinginguc