Plenty of other ways exist to make the Putin regime pay for the outrage it has wreaked on Ukraine
A grain harvesting combine is shown in Vinnitsa, Ukraine. File photo:123RF/BONDVIT
To try to shed some light on what’s been going on, I’ll use the example of wheat, probably the world’s most important food crop, of which both Russia and Ukraine are major exporters. What the world has lost with the drop in Ukrainian exports, it has more or less made up from other sources. Canada, the EU and, yes, Russia too have all increased their shares of global wheat exports in the last two months. The USDA projects an actual increase in exports this marketing year, to 204.6-million tonnes from 203.3-million tonnes in 2021/2022 and 199.3-million tonnes the year before.
According to the UN, between February and May the cost of shipping dry goods such as grain has rocketed 60%. Costlier shipping and Russian companies’ difficulties in finding insurers and shippers further threaten the global food supply by undercutting fertiliser exports, in which Russia leads the world. The US has even offered to send “comfort letters” to vessel owners leery of handling Russian grain and fertiliser because of the threat of Western sanctions.
And yet, in a flashback to his erstwhile economic craftiness, Putin appears to be trying to balance his desire to hurt the West against collateral damage to large groups of Russians. While about 460,000 people work for the national gas producer, Gazprom, and they won’t suffer much from the gas export cut-offs, Russia, according to official statistics, has about 10 times as many farmers who would be hit hard by the inability to export their produce.
Global wheat prices are already down considerably from the dizzy heights they reached earlier in 2022. The September wheat futures contract is down 35% from its May peak. Seasonal factors and rosy harvest projections are responsible for much of the decline, but the Russian move also has been priced in. The market may well balance at levels that will prevent a full-blown food crisis and a famine in the most vulnerable nations.
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