Russia has had a major influence on world wheat prices for more than 20 years. In the past 18 years the influence has been for the most part very positive for United States farmers.
For example, each military incursion by Russia since 2004 has resulted in a sharp increase in the price of wheat as well as other commodities. The invasion into the Ukraine was no exception. When that happened the Black Sea ports were basically shut off pertaining to exports, thus the world wheat export market as well as other world commodity markets were in disarray. This resulted in higher commodity prices.
By shutting the Black Sea ports off to exports it caused Ukraine to look for other means of export. The result was that ocean freight was moved to inland transportation—trucks and rail. The destination was the neighboring countries of the European Union. That worked for a short time but resulted in wheat prices in those countries being depressed to the point where farmers in those countries revolted. That brings us to present day.
Currently wheat is being shipped from Poland and Germany in the U.S. mills into the East Coast at a cost per bushel much less than the price of U.S. wheat. The situation is compounded by freight rates in the U.S. being markedly higher than world freight costs.
The incursion by Russia into the Ukraine has now turned negative for U.S. farmers by depressing wheat prices in this country.
So what do we do about it? After all, supposedly consumers in the U.S. should benefit from lower priced flour and baked products, right?
Two things could happen to make such an occurrence more palatable. A portion of the lower cost for wheat flour could be passed onto the consumer and freight rates on U.S. carriers including rail, barges and ships could be lowered so U.S. wheat would be more competitive.
Perhaps it is time for Country of Origin to be included on packaging so consumers could know what they are purchasing. If this is not possible perhaps companies using only 100% of U.S. wheat should tout that important fact on their packaging allowing consumers a more educated choice.
Ron Suppes is a Dighton, Kansas, farmer.
