Michel Portier, director of Agritel, an analysis and consulting firm specializing in agricultural and agro-industrial markets, estimated Friday evening March 4 on franceinfo that, with the war in Ukraine, food prices “flame due to a lack of short-term availability”.
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franceinfo: Why is France, which produces so many cereals, so affected?
Michael Porter: France is the leading wheat exporter in the European Union, but prices and markets are totally globalized. The big buyers of wheat, starting with Egypt, had bought wheat for a close delivery, which should have arrived between March and June, of Russian or Ukrainian origin. However, these origins cannot be charged given the context of war. They are therefore obliged to redeem that on the international scene. There is no shortage of wheat in the world, but there is a logistics problem. Ukraine still had 6 million tons of wheat to export until July, Russia had 8 million tons, which are in silos but cannot be transported! There is no longer a boat sailing the Black Sea, so buyers are forced to look to other origins [pour le blé], including France. Prices are skyrocketing due to a lack of short-term availability.
Can this price increase last for a long time?
You should ask Mr Putin if this war is going to last a long time. It is extremely difficult to have medium and long term forecasts. What is certain is that prices will remain extremely high until the next harvest in the northern hemisphere for wheat and corn. Wheat prices will remain very high at least until July. Corn prices, as the harvest is a little later, will certainly remain extremely high until October. European corn, but especially American corn, has an underlying problem: we have European legislation which prohibits imports of GMOs, while the United States is the world’s leading producer.
What are the consequences ?
The first consequence is for breeders, a very sharp rise in the cost of feeding livestock while meat prices are tending downwards. For the consumer, I would say the impact in stores should be relatively modest. Even if the price of wheat is soaring, this represents less than 10% of the price of a baguette, for example. As far as livestock is concerned, prices for poultry and pork remain extremely low. I’m not very worried. Where, very clearly, there will be an impact for the consumer, it is on the oils. Ukraine alone exports 50% of the world sunflower oil market. If we take the production of sunflower seeds in Ukraine and Russia, we arrive at 80% of world production. So there, for once, we will certainly turn to other other oils.