To know if we have an approaching “Global Food Crisis” due to the war in Ukraine, or if it is just bad decisions by “leaders”, it is necessary to “run some numbers”. How much wheat is grown in Ukraine? What percentage of it is exported? How much of the “global diet” does that represent? How much alternative food grains are available for emergency use? Is anyone doing that / preparing for it?
So let’s look at some of this.
Over 750 million metric tons of wheat were produced in 2017/18 worldwide. It’s also consumed more than any other grain in the world except for rice and provides 20% of the global population’s daily protein intake. The reason that wheat is such an important dietary staple across so many regions is due to its ability to be produced in many different types of soils and climates.
To help traders to learn more about this important global agricultural commodity, TFG has prepared this guide on everything you need to know about wheat.
The important numbers here are total wheat market size at 750 Million Tons and 20% of global protein. It’s that 20% that’s hard to “fix” if it is missing as wheat has a high protein content.
The Many Uses of Wheat
Unsurprisingly, the main demand for wheat comes from human consumption. In fact, over two-thirds of wheat produced globally is used as food. It contains many vitamins and minerals which make it a staple food product. It’s used in premium bread making, general purpose bread making, biscuit and cake making, and as animal feed.
Although foodstuffs represent the main use of wheat, it also has several alternative uses. The gluten and starch present in wheat make it elastic and able to bind water. This makes wheat useful for products like:
Paper – The starch from wheat is used to improve the strength of paper. The United States paper manufacturing industry uses over 5 billion pounds of starch every year.
Pharmaceuticals – Wheat gluten is used in the pharmaceuticals industry to create capsules
Adhesives – The adhesive on the back of postage stamps is created with wheat starch
Soaps – Wheat germ, which contains lots of vitamin E, is commonly used in soaps and creams.
Wheat is also used to produce bioethanol, but it plays a relatively small role in this compared to crops like corn.
OK… so maybe for a year or so we use less fancy paper, put corn starch in pills instead of wheat, and make adhesives out of something else… We’re talking roughly 30% of wheat used for these processes and for things like “bioethanol” to burn up in cars, when there’s a shortfall of about 3% of global wheat from the war in Ukraine.
Think maybe there’s a solution available here so people don’t have to starve to death in Egypt or Indonesia?
Note that now we are going to look at EXPORTS. This is just what leaves one country for another, not the amount consumed inside the country.
The 5 biggest wheat exporters (Russia, United States of America, Australia, Canada and Ukraine) provided about three-fifths (59.5%) of the overall value of international shipments for the nourishing cereal food.
From a continental perspective, European countries supplied half of worldwide wheat exports during 2021 with shipments amounting to $28 billion or 50.2% of total global sales. Home to two leading wheat-shipping neighbors (United States and Canada), North American exporters furnished 25.2% worth of wheat sold on international markets.
Oceania (mostly Australia) was responsible for 13% of wheat exports by value, ahead of Latin America excluding Mexico but including the Caribbean at 6.2%. Smaller percentages came from Asia (5.3%) and Africa (0.2%).
So, OK, both Russia and Ukraine are in the top 5 exporters. North America does 25% of exports, European countries (by which I presume they include Russia and Ukraine) at about 1/2. Australia picks up 13%. Nice going Australia!
Top 15 Wheat Exporters by Country
Below are the 15 countries that exported the highest dollar value worth of wheat during 2021.
Russia: US$7.3 billion (13.1% of total wheat exports)
United States: $7.29 billion (13.1%)
Australia: $7.2 billion (13%)
Canada: $6.6 billion (11.9%)
Ukraine: $4.7 billion (8.5%)
France: $4.6 billion (8.2%)
Argentina: $3 billion (5.3%)
Germany: $2 billion (3.6%)
Romania: $1.8 billion (3.3%)
India: $1.7 billion (3.1%)
Bulgaria: $1.4 billion (2.5%)
Kazakhstan: $1.1 billion (1.9%)
Poland: $994.3 million (1.8%)
Lithuania: $826.2 million (1.5%)
Hungary: $670.8 million (1.2%)
The listed 15 countries shipped 91.8% of globally exported wheat in 2021 by value.
This is by value, not by tons. But even here we can see that embargo of Russian Wheat is much bigger an impact than any Ukrainian crop failure. That’s a “leadership decision” not a crop failure…
Note, too, that crop production varies a LOT in any one country by year:
Among the top exporters, the fastest-growing wheat suppliers from 2020 to 2021 were: India (up 609%), Australia (up 167.2%), Bulgaria (up 96%), Romania (up 89.2%) and Argentina (up 46.5%).
Five countries posted declines in their annual exported wheat sales namely: Lithuania (down -9.3%), Russia (down -7.8%), Germany (down -5.8%), Kazakhstan (down -5%) and Poland (down -4.9%).
So there are certainly opportunities for other countries to “pick up the load” by planting some extra wheat, and the market is already geared for significant changes in output in any one country.
Where is the wheat going? I’ve bolded the first 1/2 dozen. These are the places where any shortage of wheat will be felt most. Couscous is a major dietary item in the Islamic world, for example:
Countries Posting Greatest Trade Deficits from the Global Wheat Trade
The following countries posted the highest negative net exports for wheat during 2021. Investopedia defines net exports as the value of a country’s total exports minus the value of its total imports. Thus, the statistics below present the deficit between the value of each country’s wheat import purchases and its exports for that same commodity.
Indonesia: -US$3.5 billion (net export deficit up 35.6% since 2020)
Nigeria: -$2.74 billion (up 33.4%)
China: -$2.72 billion (up 20.3%)
Turkey: -$2.6 billion (up 13.1%)
Egypt: -$2.5 billion (down -8.5%)
Algeria: -$2.3 billion (up 41.9%)
Italy: -$2.2 billion (up 10.4%)
Bangladesh: -$1.96 billion (up 52.1%)
Philippines: -$1.95 billion (up 24%)
Japan: -$1.8 billion (up 17.1%)
Morocco: -$1.6 billion (up 11.7%)
Brazil: -$1.4 billion (up 12.5%)
South Korea: -$1.35 billion (up 39%)
Vietnam: -$1.27 billion (up 59.3%)
Mexico: -$1.26 billion (up 26%)
Highly populated Indonesia, Nigeria and mainland China incurred the highest deficits in the international trade of wheat. In turn, this negative cashflow highlights the countries’ severe competitive disadvantages for this specific product category but also signals opportunities for wheat-supplying countries that help satisfy the powerful demand among each country’s consumers.
Those are the places to watch for any food shortage / high priced food riot effects. Watch for China to try buying up the global wheat supply…
Countries like Japan and Korea will likely substitute more rice, while Mexico will use more corn totillas and fewer flour.
But what is the size of exports in tons?
There numbers are for 2015/16 and as 1,000 metric tons.
6 Ukraine 15,800
So that year Ukraine exported 15,800,000 tons out of a global production of about 750,000,000 (yes, that’s a couple of years later, but close enough for ballpark estimates).
16/750 = 0.02133 or about 2% of global PRODUCTION.
24/750 = 0.032 or about 3% of global PRODUCTION.
Both together a bit over 5% of global wheat production. I’d wager that falls into the error band of annual global production given the numbers seen above as Yr/Yr variation by country.
On another page it was stated that Ukraine uses about 6,000,000 tons internally, so if NO crop is produced, they would want to import 6/750 = 0.008 or 0.8% of global production.
It is starting to look like the GLOBE can fairly easily handle the loss of Ukrainian grain, and any Bad Thing would be the result of allocation decisions, not gross production on a planetary basis.
6,000,000 tons is about 13,2 Billion pounds. A useful rule of thumb is that it takes about one dry pound of grains or beans to feed a person for a day (generous servings). That makes this about 36 Million persons fed for a year. Wiki lists the population as 41 million, so either they eat a LOT of wheat, or there’s lots of slack in the food system…
Wheat is grown on more land area than any other food crop (220.4 million hectares or 545 million acres, 2014). World trade in wheat is greater than for all other crops combined.
In 2020, world production of wheat was 761 million tonnes (1.7 trillion pounds), making it the second most-produced Cereal after maize. Since 1960, world production of wheat and other grain crops has tripled and is expected to grow further through the middle of the 21st century. Global demand for wheat is increasing due to the unique viscoelastic and adhesive properties of gluten proteins, which facilitate the production of processed foods, whose consumption is increasing as a result of the worldwide industrialization process and the westernization of the diet.
Gee… a lot of it goes into processed foods… and the “westernization of the diet”. Maybe, just maybe, we could eat a few percent of something else for a year or two and let the folks subsisting on couscous have our wheat?
I’m not going to give every grain and crop the same treatement. I think this has made the point that while Ukraine is a significant exporter of wheat, they are a very small part of total global production of wheat, and the percent at risk is in the annual variation of total crop yields.
I will just point out that in a comment on another thread I pointed out that most maize / corn is fed to animals. The USA, in one year, grows enough corn that were it used to feed people, it produces 7.5 YEARS worth of gross calories PER YEAR for everyone in the USA. It’s just that then we feed almost all of it to cows, pigs, chickens and our cars as “bioethanol”. Cows turn ten dry pounds of grain into one pound of wet steak. Pigs have a feed conversion efficiency of 3 : 1 as do chickens (more or less), while fish can reach 1 : 1 (no miracle there, they are cold blooded so don’t burn it up to stay warm, and remember that’s one DRY pound of grain to one WET pound of fish).
The bottom line here being that were we just to convert a minor percent of our diet from beef to pork, chicken and fish, maybe drop the ethanol percent in gasoline to 5% for a year, and then plant those acres to wheat instead of corn: There would be no shortage of what for people to eat at all.
Just saying… It’s a choice.
No, this does not mean I expect it to happen. I expect the farm lobby to get us using 15% ethanol in gas, folks will keep buying deluxe stationary, and the folks in Egypt to have food riots again.
What ought to happen is a graceful move to a less rich diet for ourselves and our cars so that the rest of the world can survive. That is not what will happen.
I’m also not addressing the “fertilizer crisis” in this posting either. It has very similar characteristics with some nations being big percentage of the EXPORT market, but with almost all production in most countries staying in the country. “Why” is pretty simple. It’s heavy and expensive to move the stuff. Better to mine / make it near point of use. So yeah, you might lose some from the export market, but there’s still a LOT made in the home market. It is more about cost of fuel and stupidly shutting off oil and gas than it is about ability to produce. Again, idiot decisions from our Idiots In Charge who can’t do basic math and do not know how things work. (But do know how to get their vigorish… It’s all about the Vig…)