More than gas and oil could wheat? If Putin is in trouble militarily and is entrenched in the battle of Donbass, having lost hope of capturing all of Ukraine, is doing better for him in what has been called the “First Corn War".
The grain that Ukraine has produced this year is sitting in silos and granaries on farms because the only port free from Russian grip at the moment is Odessa. And so to speak, because all the waters around the city are mined. Who laid the mines? Russians say Ukrainians, Ukrainians say Russians. Waiting to resolve the rebound of responsibility, and a possible demining, perhaps in mutual agreement with the EU, the world risks a huge food crisis because, as we know, Ukrainian wheat, together with Russian wheat, represents a third of the world's product, and if it cannot quickly reach the markets, i.e. African countries, some Asian countries and the Middle East, famine is inevitable.
It is not a hypothesis: the African Development Bank, for example, has estimated that, throughout the continent, mainly due to the war 30 million tons of wheat, soybeans and corn would be missing. This shortage has already resulted in Africa a 60% increase in the price of bread, with the majority of the population unable to bear such a cost. Just to give an idea of the catastrophe that would be upon us, according to the FAO in Nigeria alone this summer 19 million people will have to face a food crisis. Things are no better in the Middle East, where there are 9 million children who risk starving.
And in Italy? We talk about it with Vincent Divella, managing director of the ancient Apulian agro-food company “F. Divella spa”.
Doctor Divella, how is your company experiencing this period?
«The company lives these dark months like all companies with broad shoulders, with relative concern: in the sense that we can count on the stocks of wheat made in the past months, which guarantee us at least 3 months of survival. We have to explain, however, that we are indirectly affected by the Ukrainian grain blockade. Because soft wheat comes from the Ukraine and Russia to produce flour for bread and biscuits. And in Italy we import only 3% from that area. How then are we involved? With the lack of Ukrainian wheat, which was exported above all to China, Pakistan, Turkey, Egypt, these countries went to look for it elsewhere, namely France, Australia and Canada. Namely our sellers. Thus, with a large quantity of requests pouring into these countries, the market crashed, and prices skyrocketed. I give an example. In June 21, soft wheat was quoted on the Foggia commodity exchange at 19 euros per quintal, today it is 47 euros. And in any case, if we don't have raw material stock problems yet, we will have them in a few months. This is why our hope is that this year's harvest will be good and abundant in the north of our country, where soft wheat is grown. (Last year Italy produced 2,8 million tons ed). And above all that Ukrainian ports be freed so that the grain of that country can reach the areas where it was intended".
And what about durum wheat?
«For durum wheat, war has something to do with it, but indirectly. We remind you that we in Italy experience the paradox of producing the largest quantity of pasta in the world, but that to do so we need to import the durum wheat that produces the semolina with which pasta is made. We buy 20/30 million quintals of it abroad every year. A little from Europe, a few million quintals, but the bulk from Australia, the USA, and above all Canada. And so we come back to the price increase. Why did this happen? It happened that in 20 Canada had produced 70 million quintals of durum wheat; in '21 only 26 million quintals due to drought and other climatic phenomena. As a result, the market collapsed: in June of last year durum wheat was quoted at 28 euros per quintal, today it is 57 euros per quintal. And the Australian one 60 euros. In this case it is not only the war that has an influence, but the product itself is missing. That's why we are crossing our fingers for the countryside of Sicily (7 million quintals last year, ed) and Puglia (9 and a half million, the main Italian producer, ed), hoping it will be abundant. This will allow us to hold out for a few months, but then we'll be dependent on Canada. If 70 million quintals are made there again, then everything will fall into place: there will no longer be speculation, the increases will stop, and it may even be that the price decreases. But if it doesn't happen, if the product is missing, there will be no limits to the price increase. However, it must be added that the increase in prices was caused not only by the poor harvest, but also by the skyrocketing cost of energy and gas. An example: in January 21 I paid 1 million a month for electricity and gas, this year 1 million. Eight and a half million a year increase, no joke. And on this, yes, the war has had an impact. If the conflict continues there are no saints, speculation will continue about everything. Let us not forget that revolutions were made for bread».
Reopening Ukrainian ports is therefore essential. But Putin seems to condition the reopening on the lifting of Western sanctions. A blackmail to which evidently one cannot agree to give in…
«Evidently… However, I think that if you fail to get the ports reopened, and to get the Ukrainian grain through to reach its destinations, like a domino effect, the war will expand its repercussions on world economies exponentially. I see the "red" crisis coming, as we say. That is the bald. There is already a shortage of glass, which comes from the Ukraine, cardboard boxes, which come from China, and tin plates have decreased. We have been interconnected for some time and we can no longer do without each other".
Is this really the “First Corn War”? Do you remember another similar crisis?
«The other price crisis, that of 2008, was just a bubble. And in fact after three months everything returned. This time the bubble is caused by the war and so if it doesn't end, prices will continue to rise. I repeat, if the ports are reopened, the soft wheat issue will be resolved. But the solution to the durum wheat problem will depend not only on the end of the war but also on Canada's harvest campaign. We will only know at the end of August/September what awaits us».
Can something be done against speculation?
«Nothing can be done, if the product is missing you have to buy what is there and at the price they ask you, there's nothing you can do. And the consequence will always be the same: large companies will resist, small ones will not».
How much do we risk in Italy?
«Neither more nor less than what you risk in other countries. With an all-Italian specificity: even today, especially from Rome downwards, we each eat 25 kilos of pasta a year. If there is no product, prices will rise, it is inevitable. And what will happen in the South for example? If you have to pay 3 euros for bread in Milan, that's one thing, if you have to do it in Bari, it's another. And if it increases the dough unbearably, it's even worse. It can mean protests, conflicts and social tensions that are difficult to manage".
What solution can you imagine to stem this danger?
«Only one: it will be necessary to subsidize the millers or the bakers. Just as we have tried to do to counter the increases in energy. This too is a price that will be paid to war."
