David Dzisiak is chief operating officer at Botaneco, a plant-based ingredients manufacturer based in Calgary.
This spring, Canadian farmers will plant the most important crop since the Second World War.
The unwarranted Russian invasion of Ukraine, beyond the humanitarian crisis, loss of life and property destruction, will have a profound and dangerous impact on the global food supply, affecting all of us.
As we learned through COVID-19, our supply chains have become global, finely tuned and highly interdependent. Food is no different. This disruption will manifest itself slowly but in plain sight. What we don’t know is the full depth of the disruption or its duration.
In the past 20-plus years, with population growth and rising incomes, wheat consumption has risen by 50 per cent and global trade flows have doubled. The total consumption of grains and rice has increased by about one billion tonnes, according to data from the International Grains Council. This is everything from bread to pasta, Asian noodles, animal feed and biofuels. Yield has also doubled. Farmers have advanced their management skills and equipment engineering has enabled tremendous advances in productivity. Step change improvements in plant breeding, crop protection and fertility have delivered a sustainable increase in yield.
In February, about 4.5 months’ worth of wheat stocks was available. As you dig deeper into the inventory and forecasts, concerns become apparent. Close to half of that wheat is in China, which keeps about a year’s worth of inventory. That wheat isn’t available to the rest of the world, so once you remove it, we now have about 75 days of wheat stocks, which will likely fall to 45 days given the global dynamics. China is also a large wheat producer but recently announced one of the poorest crops in recent history.
The problem is now largely, but not exclusively, in Russia and Ukraine. Together they represent 30 per cent of the global wheat supply. In the past decade, Ukrainian wheat exports have doubled. Ukraine is blessed with some of the best farmland on the planet and a climate that feeds it. Since leaving the chokehold of the Soviet Union in 1991, they have been continuously improving their productivity, reclaiming their position as one of the world’s great breadbaskets.
Ukraine has wheat in storage from the last harvest, but shipments have essentially stopped. The key Black Sea ports of Odesa, Mykolaiv and Mariupol, are closed. Much of the infrastructure is severely damaged. Ukraine supplies 12 per cent of the world’s wheat, and 50 per cent of the wheat bought by the World Food Programme, which feeds 125 million people, came from Ukraine. Other important exports such as corn and sunflower oil share a similar story, meaning we are now seeing significant global disruptions in feed grains and cooking oil. Mariners are avoiding the Black Sea, which is also the main export point for wheat from Russia, the world’s largest exporter.
From here, it gets worse. Ukraine’s main wheat production area is between Kyiv, south to Kherson and east of the Dnieper River in the heavily fought-over oblasts of Kharkiv, Donetsk and Luhansk. Farmers are exempt from armed forces service, but can they put a crop in? A lot of labour is needed, and it isn’t known how much is truly available; seeds and diesel are also in short supply.
Ukraine’s main wheat customers are in the Middle East, North Africa, Indonesia, Pakistan and Bangladesh. They are vulnerable as they heavily rely on imports. In North America, 2021 was a major drought year, significantly cutting wheat yields. Canada had about half the crop of 2020.
Soaring costs for fertilizer are also contributing to pressure on agricultural prices. Wheat future prices are near record highs. The Food Price Index has increased by 24 per cent since last year. In Canada, we typically spend 12 per cent to 15 per cent of our income on food. In developing countries, that number can be 80 per cent. Some Canadians may tolerate $7 for a loaf of bread, but if you live on the edge of food insecurity, you can’t.
The world can’t afford to let Russia win control of Ukraine. Russian President Vladimir Putin would control 30 per cent of the global wheat trade and could begin to leverage it for geopolitical purposes. A hungry world is an angry world.
Canada has an abundance of resources, food, energy and materials. We need some strategic moves, though. The Canada West Foundation has outlined the critical investment needed in our national transportation infrastructure. Protein Industries Canada has a strategy to process more grains and oilseeds here. The importance of making our resources available to the world is as important today as it was in the Second World War – or perhaps even more.
Keep your Opinions sharp and informed. Get the Opinion newsletter. Sign up today.