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Supply Chain

Ukraine Crisis Pushes Up Wheat, Cereal Prices Globally

The crisis in and around Ukraine has pushed up global cereal prices, as Ukraine and Russia together provide about one-third of world wheat exports, new data has shown.

FAO’s index of food prices in January was the highest recorded to date, with cereals increasing by 12.5% year-on-year.

Ukraine is the world's fifth largest producer of corn for animal feed (about 36 million tonnes) and seventh largest producer of soft wheat for bread production (25 million tonnes).

A possible conflict, according to Italian farmers association Coldiretti, could damage the supply chain infrastructure of these valuable exports, and block shipments from Black Sea ports. Ukraine has already had to deal with high inflation costs in recent months.

Many analysts also worry over further market disruption, impacting not only Europe but also many North African countries such as Egypt, which depend on imported cereals to feed their population.

Italian Imports

The crisis also concerns Italy, which imports 64% of its wheat needs for the production of bread other bakery items.

Last year, Italy imported more than 120 million kilograms of wheat from Ukraine and about 100 million kilograms from Russia, which has already announced it will limit its wheat exports in the period to to 30 June.

As well as price volatility, Italy’s agricultural sector was already hampered by a lack of production and storage for several key commodities.

In addition, energy price hikes have practically doubled the costs of wheat production, while the price of agricultural equipment, phytosanitary products and fertilisers has increased threefold.

As a solution to overcome the crisis, Coldiretti has suggested the creation of 'virtuous supply chain relationships” based on agreements that enhance Italian production to meet the demands of consumers'.

© 2022 European Supermarket Magazine. Article by Branislav Pekic. For more Supply Chain news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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