WASHINGTON – Russia’s invasion of Ukraine has sent global food prices soaring, but Washington wheat farmers like Marci Green aren’t celebrating.
Green, a sixth-generation farmer who grows wheat outside Fairfield, is concerned rising costs of supplies like fuel and fertilizer will whittle away at this year’s profits even after wheat prices hit a record high in March. She’s also worried about the threat of a global food crisis as the war threatens to cut the supply of wheat and other crops from Ukraine and Russia.
“Russia and Ukraine are big wheat growers and wheat exporters, so of course that does affect the market globally,” Green said. “The price is volatile and the price is up and down, but it’s our inputs that are our bigger concern.”
“Fuel, fertilizer, chemicals – the costs for those have gone up dramatically. They were going up before the war in Ukraine and this is just making it worse.”
Global food prices rose to their highest-ever level in March, the United Nations Food and Agriculture Organization reported April 8, with wheat prices up nearly 20% from a month earlier. Russia and Ukraine together represent more than a quarter of the world’s wheat exports, with most of their crops sold to countries in the Middle East and Africa.
Randy Fortenbery, chair of the School of Economic Sciences at Washington State University, said Ukraine is likely to export virtually no wheat this year as the war disrupts seeding and harvesting crops and cuts off most export lines. Russia’s government, meanwhile, may restrict wheat exports to control prices for Russian consumers, Fortenbery said.
Russia also produces much of the world’s nitrogen fertilizer, which is derived from natural gas. The White House and Congress have moved to ban U.S. imports of Russian oil and gas, adding to market disruptions that have sent global fossil fuel prices higher.
Fortenbery said the rising cost of those supplies, coupled with volatile wheat prices, makes it hard for farmers to plan ahead. The price of Chicago wheat futures, a common benchmark, rose nearly 63% from Feb. 23, the day before Russia’s invasion, and an all-time high on March 7 before falling 31% by April 1. Soft white wheat, the variety predominantly grown in Washington, doesn’t trade on the futures market but generally follows the price of Chicago wheat futures, Fortenbery said.
“While the war has resulted in higher-than-average prices, it’s also resulted in higher-than-average uncertainty,” Fortenbery said. “That makes it challenging for a farmer to decide exactly when they should market their wheat and what price they should be willing to accept.”
Andy Juris, who grows wheat near Bickleton in Klickitat County, said most wheat farmers he knows would prefer to have predictable prices rather than the up-and-down prices seen in recent weeks.
“In these really volatile and uncertain times, if we had our druthers, we would rather have stability,” Juris said. “The price increases on the inputs have far outstripped any increases in the wheat market.”
To counter those volatile prices, farmers can sign contracts to lock in a price before the harvest, but Gary Bailey, a wheat grower in St. John, said that approach carries its own risks. If a farmer can’t produce the number of bushels in the contract, they have to buy wheat on the open market – potentially at a higher price – to make up the difference.
That risk is hard for Washington wheat farmers to ignore after historic drought caused statewide wheat yields to fall by half last year, said Michelle Hennings, executive director of the Washington Association of Wheat Growers.
Chandler Goule, CEO of the National Association of Wheat Growers, the industry’s lobbying arm, said more than two-thirds of U.S. wheat acreage is in drought conditions. That could mean lower yields of winter wheat, which is typically seeded in late summer or fall and harvested the following summer.
“We had planted in the fall where we didn’t have a lot of rain, and so now we’re in a position where we need moisture in order for our crops to grow,” said Hennings, who grows wheat outside Ritzville. “We’ve got to pray for rain.”
Glen Squires, CEO of the Washington Grain Commission, which works to market the state’s wheat around the world, said that because most Washington wheat is grown on dry, non-irrigated land, it is especially dependent on rain.
Washington farmers grow about four times more winter wheat than spring wheat, which is planted in spring and harvested in late summer, Squires said. Between 85% and 90% of Washington wheat is exported, he said, mostly to markets in Asia.
Even if wheat exports from Ukraine and Russia fall this year, Fortenbery said, the soft white wheat grown in Washington is not likely to replace it directly in countries in the Middle East and Africa. That’s partly because Washington wheat is more expensive than the Ukrainian and Russian grain. People in low-income countries, he said, are more likely to substitute rice or other staples as wheat prices rise.
In the short term, Goule said, there isn’t much U.S. growers can do to increase the supply of wheat and offset lost production from Ukraine, which accounted for about 9% of global wheat exports in 2020, according to the U.N. Food and Agriculture Organization.
“We don’t have a wheat spigot here where I can go turn it on and produce more wheat,” he said. “It takes nine months for us to grow it, and winter wheat was already in the ground when the war started.”
Ryan Poe, a farmer who grows wheat near Hartline in Grant County, said he could opt to plant more spring wheat to increase yields in the short term, but by doing so “would long-term be really shooting myself in the foot,” preventing himself from planting higher-yielding winter wheat or letting fields lie fallow to regain moisture and nutrients.
“In theory, I could go plant a bunch of spring wheat now, but spring wheat on average is going to produce probably half as much of a crop,” Poe said. “In the short term, it would be a boost, but in the long term it would mess up my rotations.”
Goule said because world wheat stocks have about three times the wheat Russia and Ukraine produce annually, the risk of an actual global wheat shortage this year is low, but rising costs mean people in low-income countries may not be able to buy enough food to feed their families.
One way Washington wheat farmers may be able to help address the global food crisis spurred by the war in Ukraine is by contributing to food aid sent to those low-income countries, Goule said, adding that about one-third of the U.S. wheat contributed to the U.N. World Food Program is white wheat, most of which is grown in the Northwest.
Randy Russell, chairman of the board of World Food Program USA, a fundraising and advocacy organization that supports the United Nations’ food assistance branch, said the U.N. organization expects to feed 137 million people in 84 countries this year, more than ever before. A confluence of three major factors – global inflation, the Ukraine-Russia conflict and drought in East Africa – are driving up worldwide hunger.
“We are facing uncharted territory in terms of food insecurity,” said Russell, who also heads an agricultural consulting firm. “We need to start focusing on food insecurity and what it means from a national security perspective, not just short term but in the longer term. If COVID and now the Ukraine-Russia conflict has taught us anything, I hope it would teach us the importance of food security.”
Green said she hopes some of the wheat from her farm could help alleviate hunger around the world, although she can’t dictate where her crop goes when she sells it.
“We would love to have our wheat be part of those food aid programs,” she said. “There is a lot of concern about food scarcity in a lot of parts of the world, and we would like our products to be part of the solution to that situation.”
Russell said American farmers will continue to play a central role in the global food supply, especially as multiple crises spur food insecurity around the world.
“We’re blessed in this country to have the productive agriculture system that we have, and it’s going to be put to the test,” he said.
“I can’t think of a time when U.S. agriculture is going to be more front-and-center, given the global situation, than it is this year,” Russell added. “We’ve got to pray for good weather and hope that we have a really good crop this year, because global supplies are very tight, the need is overwhelming.”