The war in Ukraine may lead to a major food crisis due to combat and sanctions. Bloomberg. Food was already having issues due to rapid inflation, skyrocketing fuel costs, increases in insurance prices and the lingering effects of the Coronavirus pandemic, but the combat in Ukraine has added on to all of this. Ukraine and Russia provide a significant proportion of the worlds grain supplies. This has lead to record prices for grain, and those prices could increase. The increase of prices could lead to conflict, especially in countries like Egypt that are major buyers for products like wheat.
My Comment:
When it rains, it pours. We are have a major economic meltdown even before you add into the effect of a food crisis. Once again, this will make every other problem we are having worse. Inflation will obviously go up, civil disorder is likely and stability in general will decrease globally if something doesn't change.
The article doesn't mention it but sanctions will hurt global trade as well. Russia is a major exporter of fertilizer, something that is not easily replaced. They are looking at banning exports as a response to western sanctions, so that will make it even harder to recover from the loss of grain caused by the effects of the war. I don't blame them for doing it either, our sanctions are totally insane right now.
How big of an impact Ukraine has on this is unknown at this time. It all depends on how long the war there lasts. If some peace deal is made quickly, or Russia wins decisively before spring planting happens, the effects might not be too bad. But if the war continues or degrades into a long term guerilla campaign all bets are off. I have said since the war began that I was hoping for a quick Russian victory, not because I support the war, but because doing so would reduce the casualties and long term effects like this disruption in grain production.
This could cause a lot of stability issues in countries where most food is imported, like Egypt. People will tolerate a lot from their governments, but I don't think they will tolerate a lack of food. Remember, the Arab Spring was driven in part due to high food prices and the world is still dealing with the consequences of that. We could see major food riots, revolutions or even civil war as a downstream effect from this.
The effects in America should not be as harsh, as nobody here ever starves to death. We have so much food we don't know what to do with it all. But the prices of food are going to skyrocket, even more so than they have already done. Americans are already feeling the pinch due to widespread inflation in other areas, most notably fuel, but to add food prices on top of it? Imagine spending most of your money on a tank of gas and then getting to the store and not being to afford anything. And once you are at the point of choosing between gasoline and food you can forget about buying anything else which will lead to a recession, or even another Great Depression. That seems like a possibility if things don't change.
The worst thing is that I don't think the Biden administration will do a damn thing to help ordinary Americans. They have already said that they would rather buy oil from Russia, Iran or Venezuela than to actually drill in the United States. I see the same thing happening with food prices, rather than easing sanctions on Russia to help struggling Americans they will likely create even more of them. All while questioning the patriotism of anyone who dares to question our policy in Ukraine...
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