Russia and Ukraine produce 25% of the global wheat supply, according to the Observatory for Economic Complexity. While neither of these countries export wheat to the U.S. directly, their absence from the global market is expected to strain supply and push prices higher.
All of this scarcity, from natural gas and crude oil to wheat and seed oil, will impact the cost of doing business for food manufacturers at home.
Varroney, who dove into global supply chain issues during the pandemic in his recent book, said that with the rising cost of inputs, some companies won’t have a choice but to raise the cost of their products for the end user. To him, it all comes down to the rising cost of energy at every step of the supply chain.
“Everything from getting food from the ground, to producing it, to storing it, to delivering, it all involves energy,” Varroney said. “Natural gas is utilized to manufacture those foods. Then when you get past that? And you get into logistics, you’ve got a store, these food products, so there’s gasoline to ship and there’s electricity to store.”