Food For Thought: Of Commodities and Consequences

The war in Ukraine and your grocery bill

By now nearly everyone has noticed that the cost of everything is higher than it was just a few months ago.

Like with all complex social and economic phenomena there’s always more than one cause. The increases in the price of housing, gas, and groceries are not just the result of COVID, government spending, monetary policy, and global trade but rather the interplay between various factors. And now we’ve added war to that mix.

What we’re seeing today is a perfect storm.

I could go into a great deal of detail about supply chains, labour markets, world trade, and the theories of the so-called “dismal science” that is economics. But I won’t. I’m going to give you a simple fact:

Russia and Ukraine account for 30 percent of the global supply of wheat and 12 percent of the world’s calories.

Let that sink in for a minute.

Ukrainian farmers aren’t able to grow much. Who can risk planting in a war zone? Fuel and fertilizer are in short supply and crushingly expensive when available. Russian forces have specifically targeted agricultural infrastructure and transportation is nonexistent or prohibitively dangerous. Sanctions against Russia are, in the eyes of most of the world, entirely justified - most of the world won’t do business with tyranny.

And thus begins a chain reaction affecting the entire global food supply.

Other wheat-growing limit exports to protect their own national supply. Fuel and fertilizer prices, already soaring due to the war, leave farmers in countries like Canada and the US (both capable of growing more than they need) with hard decisions this spring - is it worth the cost to plant more? What if we have a bad growing year? Grain reserves are emptied to try to stabilize supply. Food manufacturers and other large buyers try to lock in deals with mills and producers to ensure consistent supply and price - but they aren’t buying just for today, but for three months from now, or six months from now. They are buying and betting on futures - and the future looks pretty grim.

And while it’s not hard to picture how the price of wheat affects your family’s food costs, it’s not just wheat. Corn is another major Ukrainian export and you would be startled to know just how much corn is in your grocery basket - it’s not just pretty little kernels and microwave popcorn. Corn syrup and starch are in everything, but how about microcrystalline cellulose coatings on medication? Or Vitamin D in your milk? Or countless other additives that are in everything from soaps and cosmetics to the glue on your envelopes? And what does meat eat? You got it - corn.

And while we’re at it, Ukraine is also a major grower of oilseeds, in particular its iconic sunflowers. If the price of sunflower oil goes up manufacturers will look for substitute oils like soybean and cottonseed, which drives up the prices of those oils and anything that usually contains them.

Higher food costs bite lower-income earners in a painfully disproportionate way. Lower income means a higher percentage of total income spent on food, and with higher costs for absolutely everything including fuel, housing, and interest rates, more and more families teeter on the edge of financial disaster.

And just as shortages can spell disaster for lower income families close to home, consider what happens in poorer countries that rely heavily on food imports. It may seem like ages ago, but the Arab Spring was fuelled in significant part by rising food prices. Rising prices are a political issue wherever you go, but the dual prospects of financial ruin and starvation create dangerous situations that can destabilize governments and entire regions.

But for most people the price of food will be yet another drain on family finances and tradeoffs will need to be made, at least in the short to medium term. We all found out during the early days of COVID that our supply chains weren’t quite as robust as we thought, and even now there are gaps on the shelves that will certainly persist and likely be more common as prices rise.

So how can you limit the impact of both rising prices and shortages at your dinner table?

There are plenty of articles out there on how to save on groceries. If you’re a reasonably price-sensitive shopper you already know about unit pricing, coupons, flyer apps and price matching. Here are a few more things to consider:

• Get cyclical. There’s a lot more to the grocery pricing than the specials in your weekly flyers. If you watch those flyers closely you’ll notice patterns like pork being on sale every X number of weeks, or canned goods having a regular pattern of discounts. Frozen foods like fruit and vegetables often go on sale as harvest seasons approach because producers want to clear older stock. The specifics will vary depending where you live and where you shop but if you observe for a while you’ll see the patterns.

• Be brand-wise. We all get attached to our favourite brands (especially ketchup!) but now is a good time to experiment a little. Don’t wait until your favourites disappear from the shelves to see if another brand or a private-label can compete because everyone else will be doing the same thing. Private-label products are often made by the same manufacturers with the only difference being the package and the price.

• Stock up. Stocking up is not the same as hoarding. If you bake regularly it makes sense to have an extra bag of flour on hand. Ditto an extra bag or two of sugar. Wiping out the shelf of sugar because “you never know” is stupid, unethical, and will likely cause ants to take over your storage. You don’t need a lifetime supply of anything, but rather enough that you can whether the occasional shortage or a long gap between sales. Don’t wait until you’re out of something before you go looking for it.

• Buy less and waste less. I know that seems obvious, but hear me out. The most expensive food is the food you waste because you get no value out of it, other than the grim task of tossing it in the trash. I’m not saying you need to go full-meal prep or anything, but take an honest look at what you actually consume vs. your good intentions. You may make a few extra trips to the store until you get the hang of it, but it’s worth it in the long run.

• Get local. We all developed a better appreciation of our local businesses during COVID, and if you haven’t already done so, find out where to get locally-made food. Farmer’s markets may not necessarily be cheaper or a complete solution they are an important link in food security. CSA boxes allow farmers to share the risks (and rewards!) of farming directly with consumers so if you like the idea, why not give it a try? And even if you have a brown thumb (like me!) you can probably manage the most local food of all - a few herbs in a pot on your windowsill.

It’s been a long time since inflation and shortages were a regular part of life, at least in North America, and such things are beyond the memories of many people, including many adults. But as we have found out, most clearly over the last two years, is that we are not immune to the issues facing everyone on this planet. Our relative prosperity and peace has shielded us to some extent, but for the foreseeable future the whole world’s problems will be on our plate.