“Both Russia and Ukraine are very large grain producers,” Opher Baron, professor of operations management at the University of Toronto’s Rotman School of Management, told CTVNews.ca on Tuesday. “Any long-term shortage of grain exports from either would change the price of grain, as it is a global commodity.” On Saturday, Russia announced it was immediately withdrawing from an agreement that allowed ships to export grain from Ukrainian ports. Brokered in July by the United Nations and Turkey, the short-lived deal saw more than nine million tonnes of grain leave Ukraine on 397 ships. Other food and fertilizers were also allowed to pass safely through a humanitarian corridor in the Black Sea. According to the UN, the grain deal has helped reduce global food prices by about 15 percent after they spiked after Russia invaded in February 2022. “It affects everything because it’s about 15 percent of all calories consumed on Earth,” Dalhousie University food safety expert Sylvain Charlebois told CTVNews.ca. “You’re basically seeing a global breadbasket being affected by geopolitics and a massive conflict.” The UN, Ukraine and Turkey plan to continue the program and 12 ships have reportedly been able to leave Ukraine since Monday. It remains to be seen if or when Russia will forcefully reinstate its previous blockade of Ukrainian ports. “I think it’s really an unfortunate turn of events that the deal ended,” said Charlebois, who is a professor and senior director of Dalhousie’s Agri-Food Analytics Lab. “It doesn’t bode well for the future. It’s going to be extremely difficult for Ukraine to mobilize anything, which will discourage farmers from growing anything, which will ultimately affect wheat prices around the world. And that’s something we’re starting to to see the last two days, unfortunately.” According to Statistics Canada, the world’s largest wheat exporters in 2021 were Russia, the US, Australia, Canada and Ukraine. which has since been overthrown by war and sanctions. In the wake of Russia’s invasion of Ukraine in February 2022, a June 29 Statistics Canada report showed prices of bread, pasta and cereals rose by more than 12 per cent to nearly 20 per cent, while overall Canadian inventories of wheat fell by almost 40 percent. Meanwhile, food producers were paying nearly 75 percent more for wheat in April 2022 than a year ago. Canada produces most of the wheat it consumes, which still leaves plenty available for export. Higher domestic production in 2022 compared to 2021 and the reopening of Ukrainian ports for wheat exports in late July saw prices fall in Statistics Canada’s October analysis. However, prices started to rise again after news of Russia’s withdrawal from Ukraine’s grain deal. Wheat futures rose to more than $9 a bushel on Tuesday, from nearly $8.30 on Friday, according to Nasdaq. On November 1, 2021, prices were below $8. “When prices move globally, so do local prices,” explained the University of Toronto’s Baron. “Fortunately, given that we are a very large player in the grain market ourselves and that supply chain costs in a local market are lower than in a global one, the relative price increase that end consumers may face is not large ». Charlebois says that while Canadians may have to pay higher prices in places like the bakery because of Russia’s actions in Ukraine, because we produce so much wheat ourselves, Canada won’t fall victim to the kind of global food insecurity that it could affect places like Europe, the Middle East and North Africa, which are heavily dependent on imports. “With geopolitics, the problem is that there is a lot of uncertainty, and uncertainty will come at a price,” Charlebois added. “So at $9 a bushel right now, there’s uncertainty, and uncertainty is going to force companies to pay more for grain, no matter where you are around the world.” With files from CNN and the Associated Press
