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Russia, Ukraine and the impact on Australian prices


The conflict in Eastern Europe is geographically far from home but the impact is being felt in our hip pockets as well as in our hearts*. It has joined the many other factors including supply chain issues and problems caused by lockdowns/COVID outbreaks to put pressure on the cost of living.

Find out more about the problems the recent outbreak of war between Russia and Ukraine is causing. 

Wheat supplies

The unrest has caused significant disruptions to the grain market. As reported by the New York Times, “Russia and Ukraine together supply more than a quarter of the world’s wheat, and coming disruptions could fuel higher food prices and social unrest.” 

Russia has already limited the wheat is exporting in response to pressure from other countries to call off its forces. The NYT article also explained that “Two-thirds of Russian wheat and barley for the season have already been exported, but if sanctions ended up removing the remainder of the crop from foreign markets, global prices could be driven up by nearly a third.”

The price of wheat is fluctuating significantly and there is concern over whether the war will interrupt the harvesting of wheat during the Northern Hemisphere’s summer. If this is the case, there will be a further impact on supplies. 

Will Australia step up?

Australia is another major producer of wheat so the potential exists for us to step up production to supply the world. The good news is there are some bumper crops on the way, especially from Western Australia. However, supply chain issues will make it difficult to ensure the harvest can help to feed the world. As shared by Al-Jazeera,  “Western Australia’s largest grain-growing cooperative, is investing nearly $1bn in new and upgraded infrastructure. But far larger investments are needed to upgrade networks in other wheat-producing regions of Australia, according to industry figures.” 

In other words, there aren’t enough rail networks, truck drivers and ports to transport wheat supplies around the world to meet demand. In addition to this, the rising costs of fuel and fertiliser mean that a surplus of wheat won’t necessarily lead to lower costs for consumers, even in Australia. 

The cost of oil posted a worst-case scenario in early May, reporting that the threat of an embargo on Russian-produced oil could see a jump in prices of up to 77 per cent. 

Australia doesn’t buy oil from Russia, mostly sourcing it from Asia. However, the squeeze on fuel prices in Europe means costs are going up everywhere. This is coupled with the problems caused by slowdowns in fuel production during COVID to result in those staggering price increases we are experiencing at the bowser. 

We are feeling fuel price jumps on a personal level but companies of all sizes are dealing with rising costs as well. This is why the price of everything is going up; businesses can only go so far to absorb changes to fuel expenses before they need to pass the jump on to their customers. 

If you have a business that relies on freight to get your goods into the hands of your customers, while price hikes are unavoidable, you can still find some deals and negotiate to make sure you’re not overpaying. This is something EFS can help with.  

*We send our passionate support to the people of Ukraine and join the rest of the world in condemning Russia’s actions at this time. 

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