The ripple effect of war on prices

The war between Ukraine and Russia is affecting the prices of several staples including wheat, oats, and their associated by-products. Ukraine has placed a ban on the export of wheat, oats, millet and other staples, as their current crisis with Russia has forced them to withhold their exports to protect their food security. Although Jamaica sources these food items from the United States of America it is anticipated that prices will increase. 

Ukraine and Russia provide the world with approximately 30 per cent of wheat mostly to Europe, Africa and Asia. Consumers of Ukrainian wheat will now have to seek suppliers elsewhere which, in turn, will increase the demand for the product. As the demand increases and the supply decreases, prices will increase and Jamaica will be impacted. The by-products of wheat and oats include flour, bread, pastries, cereals and animal feed. 

Jamaicans will not be the only ones affected but the Caribbean, at large; economists have it to say that the Caribbean is strongly dependent on imports. The region is still suffering from the effects of the pandemic and has not fully recovered financially. The 9.7 increase in inflation in Jamaica will only increase. Five thousand bushels of wheat and corn is now $926 after increasing by 5.9 per cent, this is the highest it has been since 2013. It is expected that the prices will increase the more Russia invades Ukraine.

In addition, Russia has now banned the export of their fertiliser until 1 April, they are one of the top global exporters of potash, phosphate and nitrogen-containing fertilizers along with China, Canada, United States and Belarus. These fertilizers are used for nourishing the soil and preparing it for sowing which results in greater production levels for corn, wheat and other grains. The Jamaican agricultural sector is now considering finding another source of fertiliser for the farmers. But, other providers of fertilisers get their raw material from that region of Russia, hence it would be difficult for these providers to fill the demand of the Russian fertiliser market.

Prices of oil, natural gas, shipping costs increases day by day. Food prices were already spiking before the war and now uncertainty plays a role in the high prices. Jamaica imports wheat, corn, rice, soybean meal, soybean oil, vegetable oil and refined sugar. Jamaica imports up to 21.7 per cent of its goods, most of it coming from USA.