Why is there a Wheat Shortage?

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Wheat shortageA number of unfortunate events have contributed to the situation we find ourselves in lately regarding the shortage of wheat. The invasion of Ukraine is of course a major factor, causing around £6.8bn of wheat to be stuck in transit.

Last year, Ukraine was the sixth largest exporter of wheat in the world, but the invasion has disrupted shipping in the Black Sea. This is the main route for the transportation of grains and other products. This has badly impacted African markets in particular, most of whom were already in dire straits with food shortages. But everywhere else will suffer the effects of these occurrences too with the United Nations warning of a 22% rise in food prices.

Werner Hoyer of the European Investment Bank said: “Ukraine is a rich country. Ukraine is the wheat basket of Europe, and it’s sitting on £6.8bn worth of wheat right now from last year’s harvest. “They cannot export it, they have no access to the sea. “This is one of the key issues that we must address, because they are industrious people. “They are sowing like crazy right now, and they will expect probably a good harvest, maybe 70% of last year’s harvest, in a couple of months – and then what to do with it? “So these are issues that need to be addressed immediately, in addition to the social needs and the daily problems that Ukrainian citizens face.”

Developing countries are vastly reliant on Ukrainian wheat, many were already experiencing record-high food prices due to things like drought and internal conflict. According to the World Food Programme (WFP), the cost of a food basket in Ethiopia has risen 66% and the cost in Somalia is up 36%. S&P Global Intelligence said Egypt imports 80% of its wheat from Ukraine and Russia. Other locations that will be severely impacted by a shortage of wheat include Bangladesh, Yemen,Turkey and Lebanon. Ukraine is also the second largest supplier of grains, including wheat and corn, to the European Union, that’s 14% of EU grain imports in terms of volume.

 

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