War and Wheat: Increased Insecurity
Since the Russian invasion of Ukraine, natural gas and oil have been the commodities that have grabbed the most headlines. And, for good reason; without energy the world grinds to a halt. However, maize and wheat have not gathered the same attention, despite the fact that Russia and Ukraine are two of the leading exporters of wheat and important exporters of maize. In 2020, Russia exported 37.3 million tonnes of wheat and Ukraine exported another 18.9 million tonnes, totalling 56.2 million tonnes between the two countries. For context, the European Union, the United Kingdom, and the United States exported a combined 59.89 million tonnes in 2020. Between economic sanctions and the de facto state of war in Ukraine, a significant portion of the world’s supply of wheat is locked up in ports and is not being shipped because of the ongoing military conflict. The same is true for the 34.47 million tonnes of maize that Russia and Ukraine were forecasted to export in the 2021/2022 trading year.
Maize and wheat are important exports. Not only are these commodities the staple for an array of foods, these cereals also have plenty of non-food uses like animal feed, biofuels, paper and plastic so shortages pose an operational risk to businesses and individuals that require maize and wheat to make a living. Matters are made worse when considering maize and wheat futures traded on the Chicago Mercantile Exchange have seen 30.97 per cent and 52.34 per cent year-to-date increases respectively, as of 24 May 2022. Likewise, the Teucrium Corn ($CORN) and Wheat ($WEAT) exchange-traded funds have made significant year-to-date gains on the Nasdaq – 33.63 per cent and 52.34 per cent, respectively.
These price increases and supply shortages of maize and wheat will also raise significant risks to the operations of NGOs and similar organisations. In a factsheet published in March 2022, the World Food Programme explains that there are 44 million people in the world on the brink of famine, and that “global needs for humanitarian assistance are higher than ever”. The same factsheet highlights that the countries most dependant on Russian and Ukrainian wheat are mostly aid-dependent countries like Bangladesh, Egypt, Sudan and Yemen. The risk of food insecurity posed by shortages in maize and wheat is exacerbated by the fact that the supply of maize and wheat is dependent on harvest. Crops cannot be extracted or distilled throughout the year to control supply and prices in the same manner as fossil fuels. This means that food insecurity in already aid-dependent countries is hardly an issue that can be mitigated in the short-run.
The international impact on food security of the current shortages of maize and wheat also ring alarm bells for food security in a planet facing a climate crisis. A journal article published in the Journal of the Saudi society of agricultural sciences suggests that rising temperatures could lead to a significant reduction in wheat yields among a variety of wheats mid-century. The future for maize yields is not too dissimilar, according to a journal article published in Agriculture systems. So whilst the current situation is unlikely to be sufficiently mitigated or controlled, it stresses the opportunities and the need for research such as synthetic or lab-grown alternatives to mitigate future risks to food security posed by climate change.