LONDON (Bywire News) - As Russia’s war in Ukraine continues to rage, another side-effect of it is beginning to emerge. And it will signal an escalation of the cost-of-living crisis in the UK – but also be potentially devastating in the world’s poorest countries, too.
As of Monday 7 March, the price of wheat has gone through the roof, bringing it to a 14-year high. This is because Russia and Ukraine supply 29% of the world’s wheat.
But, like many things that trade on the stock market, people will not feel the effect just yet. This is because the trading price is often for “futures” – prices that are contracted in advance.
Take the Teucrium Wheat Fund. It’s a fund that people can invest in, based on the future price of wheat. It’s saying that for May deliveries, the price for a bushel (60lb) of wheat will be over $12 – double that of a year ago.
So, while the price is through the roof now, it may be the summer before people see the increase in food prices. But because of society’s reliance on wheat for staple foodstuff, the effect could be dire.
Already in the UK, the price of “starchy” foods like bread and potatoes had gone up by 3.5% in the year to January 2022. But within that, pasta rocketed by over 26%. This comes off the back of steep increases in wheat prices in previous years. Factor in the fact that general inflation is set to be over 8% soon. Meanwhile, the price of fertiliser to grow food in the first place has shot up. Then, add in the rising cost of oil and petrol to transport food. As another side-effect, wheat is also used to feed animals like chickens. Couple all this with UK wage increases not matching any of this – and a sudden increase in basic food prices could be a disaster.
Before the coronavirus pandemic, 22% of people in the UK lived in poverty – that’s 14.5 million people, including 4.3 million children. The pandemic increased this by at least 700,000; think tanks were warning pre-Ukraine that the 2022 cost of living crisis would plunge at least 400,000 more people into poverty – and now, we have the knock-on effect of Russia’s war, too.
But as always, the UK is not by any stretch the worst country affected by this. People living in countries like Somalia, Yemen and the Central African Republic already lived in a constant state of hunger and malnutrition, with devasting child death rates, too. Now, these people’s situations will become even worse. On the ground in Ukraine, and as Russia’s war continues the situation for people there is becoming more and more precarious – with food and water shortages already happening.
And all of this is without considering that we may not even get the food in the first place. One fertiliser company has already warned of a ‘not when, but how big’ global food crisis with shortages potentially running up to 50%.
But don’t worry – some people are going to be very happy that the price of wheat has rocketed. Already the Teucrium Wheat Fund has said its ‘offering 23.4m shares to investors’. That is, it expects the price of wheat to continue to rise, therefore there’s money to be made in buying shares now – while the rest of us suffer.
If the war in Ukraine has exposed anything, it’s that the globalised world we live in is more exposed to globalised shocks than ever before. And as always, it’s the poorest people suffering as a result.
(Writing by Steve Topple, editing by Klaudia Fior)