The Russia-Ukraine war has caused commodity prices to skyrocket as sanctions on Russia and the economic consequences of war in Ukraine reduce global supply.
The two countries, known as the breadbasket of Europe, are responsible for over a quarter of the world’s wheat exports, with these supplies no longer making their way into global supply chains, prices have risen by nearly 40 percent since the start of the year.
“Wheat prices were already rising because there had been a smaller harvest in Canada than expected,” Tom Harvey, the general manager – commercial, for Spinneys Dubai said.
Now, Harvey says his firm is “certainly in a position where suppliers are talking to us about what the fallout will be for ingredients.”
With wheat in high demand, the cost of producing bread is going to increase, Harvey said, although it will remain at the discretion of retailers as to how much, if at all, this cost is passed onto consumers.
However, beyond bread, wheat is a critical commodity along many other food supply chains, as an ingredient, or as part of the manufacturing process in products.
“The impact of wheat is going to impact a significant number of categories, it’s not just bread. Cereals, in terms of packaged cereals, will have a significant impact, and it’s also going to have a big impact on pasta. Everything where it’s a component to make something else – chicken, eggs, it will have an impact on the price of beef, a lot of grain fed beef, and there’s not an insignificant amount of beef coming into the region’s markets from Russia,” Harvey explained.
Consumers in the Middle East have already been grappling with rising costs as the world faces high inflation. The Ukraine-Russia crisis has further stoked these fears, with experts warning of higher inflation in the short and medium-term.
Harvey said that inflation was already causing food prices to rise, noting in particular rising oil prices and increasing freight costs.
“We as a business are clearly aware that there is a significant cost in the price of goods and in terms of income a lot of people are feeling the squeeze … We have to be mindful that we continue to meet the needs of our customers,” he said.
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