People across the globe look at different factors for how bad their economy is going. Currently, there isn’t much good anywhere, so now it’s just a measure of how bad it’s gotten. For the U.K. and the U.S., one of the items we both look at is bread. It has a relatively stable price both in the summer and the winter.
These even prices are in large part due to the advancement in storage for the raw ingredients to make bread. When the importation of those ingredients is interrupted, the price shifts drastically and suddenly. In the U.K., the prices have skyrocketed by 20% across the board. For them, this is 25 pence increase brings the cost to £1.30. These costs are because of the reliance on Ukraine and Russia for grain.
As both countries account for 30% of the global grain production the choke is being felt across the globe. Ukraine’s ability to farm and produce has been completely choked off as a result of the conflict. Russia’s new trade embargos make the use of any of their grains impossible. For the U.K., this means turning to other suppliers to manufacture their bread products.
Going to other countries for grain means the prices are being forced even higher now. According to The Telegraph wheat currently trades $11.25 (£8.45) a bushel. This represents a 30% increase from last week and almost double the price since March 2021 when it was trading at $6.50 (£4.87). These kinds of increases are things the U.K. certainly is not set up to take right now.
The U.S. cannot accept these changes either. We are able to sustain our grain supplies due to the plains here in the United States. Yet, the reduction of Russian oil to 10% of our imported oil is making people feel the pain at the pump as the price of oil keeps going up. They were already going up as a result of Biden’s energy policies, but they are only getting worse as the days go by. These kinds of trades and missions make our ability to sustain growth even more difficult.
With the war pressing on and no end in sight, the question now turns to the summer planting season. If the conflict continues as it has, there won’t be the people, supplies, or time to make the summer planting season. Missing this will send these already inflated prices even higher and put a bigger constrain on the demand already being felt in the U.K.
It’s not just wheat that is facing this increase. These two nations also make 32% of the globe’s corn, 17% of our barley, and over 50% of the sunflower seeds and sunflower oil. While these all might sound like things we are not dependent on, they are used in loaves of bread, beer, and baking recipes among other things. Russia also has a good chunk of the metals markets. Their 6% of aluminum, 7% nickel, and 3.5% global copper production is not something to ignore. Missing the production of these metals will change global prices quickly as well.
As the U.K. finds itself at a massive loss due to this war for grain production, the rest of Europe is feeling the loss on the energy sector. We must remember how much natural gas and oil Russia sends to the EU. The nuclear plants in Ukraine help power the EU. And prices skyrocket as these losses are experienced. It’s going to be a struggle as long as this conflict wages on.