After Russia invaded Ukraine, wheat and corn prices rose. This sparked fears about looming shortages. Nearly 30 percent of global wheat exports are to Russia and Ukraine, and almost 20 percent are exported from Ukraine.
Even though America doesn’t rely on wheat from Russia or Ukraine, due to the fact that staple crops are traded worldwide on commodity markets, wheat futures hit record highs in March, shortly after Putin launched his war against Ukraine. Wheat traded 41% higher on Chicago’s exchange than the week before in March’s first week. This was the largest price increase in over 60 years.
The Russian invasion caused a dramatic rise in corn prices as Ukraine accounts for 13% of global corn trades. Corn prices have increased by more than 21 percent since the invasion.
However, even before the war, corn, wheat, and other food prices were on an upward trajectory. Grocery store shelves and supermarket shelves told a story of shortages in many commodities.
In 2021, corn prices rose by more than 20%.
The same holds true for meat and dairy prices. In February, the Bureau of Labor Statistics Consumer Price Index, (CPI), showed that food prices increased by 7.9 percent year-over-year, an increase more than any other time in the past 40 years. This was before Russia invaded Ukraine. According to the Heritage Foundation, “[o]ver six months, every month’s increase in price has exceeded 4 percent, and each subsequent month has been greater than the preceding month” (starting at 4.6 % in September and ending at 7.9 percent February).
The CPI confirmed what grocery store shoppers knew already: food prices are getting more expensive every month.
Biden’s energy policies have had the greatest impact on food prices than any other set of administration policies. Food production is dependent on oil and gas. Farm machinery such as harvesters, loaders, and trucks, as well as irrigation systems, don’t run on green energy or unicorn fuels. They run on diesel, gasoline, and natural gas. Oil and natural gas are also used to make the pesticides and fertilizers that make the U.S. crop yields and production the envy of the rest of the world.
According to a report by The Heartland Institute, the Biden administration’s anti-fossil fuel measures are the main factor in higher oil and gas prices. Oil prices rose 60%, natural gas prices soared by 61%, and gasoline prices rose 98c per gallon (roughly 42%) Agriculture is an energy-intensive sector.
The cost of fertilizer has increased as well. Not only have fuel costs increased to plant, harvest, and ship crops but so has the cost. Natural gas and oil, which are components of fertilizers, can be used in multiple ways. There is also limited refining or chemical capability. Oil and gas that are used to refine transportation fuels cannot be made into fertilizer. This is not an issue in times of high supply. But, it’s not what we are facing now. The result is that fertilizer prices are now higher than those of oil and gas in general. They were 98 percent higher than in January 2021.
Biden’s success in stopping oil and natural gas pipelines from being built, its new regulations and oil and gas operations, its moratorium and slow-walking drilling permits, and its new regulations have led to higher oil prices and higher food prices.
Biden and his staff either don’t get the connection or can’t grasp it. But they don’t care. Remember Jen Psaki, White House Press Secretary downplayed rising turkey prices before Thanksgiving. Or, in February 2021, Energy Secretary Jennifer Granholm laughed at the question of rising gas prices and the effect on American households.
Is there any policy that could alleviate the current and pending shortages of food and price rises, if Biden does not reverse his anti-fossil-fuel policies?
Yes. The federal Conservation Reserve Program (CRP) pays farmers the right to not farm on valuable cropland of 2.4 million acres. A further 1.275 million acres of arable land are currently inactive under the Wetland Reserve Program.
While it is possible to debate whether it is wise for the federal government to pay farmers to not farm in normal circumstances, when crops are abundant, that is not the case right now. People’s lives could be at stake due to rising prices and a possible food shortage. The poor might have to choose between food and other necessities.
The Department of Agriculture should issue an urgent waiver that allows farmers to use acreage in the CRP or WRP without penalty. The waiver should be extended as long as there is a crisis. This could allow millions to be produced, reducing the price rise and preventing a shortfall.
If the CRP/WRP continues, this emergency waiver should be included in all contracts. This would allow the Agriculture Secretary to declare an emergency, which would result in the issuance of a waiver allowing food production on land fallowed under the programs.
Bipartisan support is likely to be given for increasing acreage available for production. This could help alleviate food shortages in the US and abroad.