Together with colleagues at Sweden’s University of Agriculture, they have investigated how the loss of production caused by the war in Ukraine has affected food prices globally. For wheat, corn and barley, for example, Ukraine accounts for two to three percent of world production. In the case of sunflower oil, 26 percent.
The prices of grain rose very much immediately at the outbreak of war. Wheat, which is traded on the Matif grain exchange in Paris, for example, rose by 35 percent between February 1 and April 5 this year. Here in Sweden, the price increase was 30 percent for wheat during the same time.
– We were so surprised when the war started and prices rose so much. Two to three percent of the world’s production, and only part of it is lost, should prices rise like that?, says Jansson.
Their conclusion is that the reaction to the war, and the loss of food in the world that it entails, is unreasonably strong.
– You should have expected a price increase of perhaps ten percent, no more. One wonders why prices rose so much, and the answer is that we don’t know. The fact that production is decreasing is not explanation enough.
Increase in prices before the war
Prices rose a lot even before the war, and then the explanation was bottlenecks, more expensive fuel and more expensive fertilisers, explains Jansson. The war came on top, and then it’s more about expectations and fear, is the researchers’ interpretation.
– It is a kind of insurance behavior. Feed manufacturers and breweries, for example, who buy a lot of grain, wanted to ensure availability.
It could also be pure speculation, he believes. Grain is bought and sold on contracts on the grain exchange, often long before the crops are harvested. Just like with other securities, the price increases if more people want to buy. Then it can be attractive to invest money in grain paper.
Prices should fall
Prices have fallen back during the late spring and summer, but should reasonably fall further, Torbjörn Jansson thinks.
But according to him, it is not a lack of food that is behind the fact that famine now threatens millions of people, including in the Horn of Africa, but the high prices.
– People are not starving because there is too little food in the world. They are starving because they have too little money. There is almost as much food now as before the war, says Torbjörn Jansson.