Wheat prices in Europe are hitting record highs and now India has put a ban on exporting the product, which has sparked new fears about worsening shortages.
On the Euronext stock exchange, wheat hit the record high and it is in part because of the export ban from India after authorities shut them down due to the droughts in India that have massively affected crop yields.
Der Spiegel reported that the price for a ton of wheat hit €435 (~$454) on Monday morning, as supplies from Ukraine, India, and even parts of Europe which are also suffering from drought, dry up.
CNBC reported that EU trade chief Valdis Dombrovskis expressed concern about the export ban from India saying, “That’s something which is very much of a concern.”
“We agreed with the United States to cooperate and coordinate our approaches in this area, because … as a response to Russia’s aggression against Ukraine and a corresponding increase in food prices and concerns about food security, countries are starting to take export restrictive measures,” he continued.
“And we think that this is a tendency which can only actually aggravate the problem,” specifically giving a forthcoming ban on the export of palm oil from Indonesia as something which would only “make matters worse.”
The European Commission has officially revised its official growth predictions downwards, while food security in Europe is set to become far more unpredictable and unstable.
POLITICO reported that the European Union (EU) is only expecting overall growth to be limited to 2.7 percent this year and inflation in the EU is about to hit 6.9 percent this quarter.
Paolo Gentiloni, the EUs economic tsar, insists that the economy is still growing and that it is not appropriate to use the term “stagflation” to describe the current situation in the Eurozone.
“We have a very high level of inflation, and we have one of the deepest downward [revisions] for growth in our seasonal forecast. But this is not until now bringing growth in negative territory,” the publication reports the commissioner as saying.
“I’m not a strong supporter of the stagflation word because it was used in previous and very different circumstances, but indeed we have very high inflation and quite low growth,” he also emphasized.
While it does not seem like these numbers are all bad, the published forecast does not factor in the possibility that Russia might cut off Europe from much needed supplies of gas – Poland and Bulgaria have already been cut off.
POLITICO also reported that if Russia did decide to cut off Europe, countries who are heavily reliant, like Germany, will quickly fall into a recession. The situation does not look good for Europe and the rest of the world.