Other countries like Argentina, Brazil, India, have stepped in to fill the global wheat supply gap that was created by the Russia-Ukraine war, The New Times has learnt.
Russia and Ukraine have been major players in the global wheat market, but the war waged by the former on the latter has disrupted the supply of this staple cereal worldwide.
Faradjallah Ndagano, Company Relations Affairs Manager at Bakhresa Grain Milling Rwanda Ltd/AZAM – a major wheat processor in the country – said that the firm buys wheat from the international commodity markets where the cereal from various countries is traded.
"There is no shortage of wheat supply. The global market is not dormant, they [players in it] are dynamic as they look for other places to source the cereal such that their customers do not lack wheat,” he told The New Times.
Ndagano said countries like Argentina, Brazil, India, and [some countries in] Europe have started supplying wheat to the global market.
"It depends on the [wheat] produce they have got. Once they have met their food needs, they take the surplus to the international market,” he said.
Bakhresa Grain Milling Rwanda Ltd needs between 150,000 and 180,000 tonnes of wheat per year, which it has to import because of the very limited local supply of this cereal.
Indeed, Rwanda's wheat production is by far too small compared to the demand for this staple commodity. In 2021, Rwanda produced 13,684 tonnes of wheat, according to the Seasonal Agricultural Survey 2021 Annual Report by the National Institute of Statistics of Rwanda.
Commenting on prices, he said they keep changing as a result of different factors including the wheat output, and challenges of the day, but indicated that of course, the war somehow contributed to the prices.
"The prices increased for sure,” he observed, indicating that the prices change depending on the bargaining between a particular seller and buyer.
Michel Kavutse, the owner of Carrefbak Industries Ltd, told The New Times that there has been a wheat flour price increase since the Covid-19 outbreak in 2020, and that the Russia-Ukraine war aggravated the situation.
He indicated that the cost of a 25-kilogramme pack of wheat flour [at the local market] increased from Rwf14, 700 before the covid-19 pandemic, to RwfRw20, 300 just at the beginning of the Russia-Ukraine war [on February 24, 2022].
Currently, he said, the same 25-kilogramme pack of wheat flour costs Rwf24, 150, which implies a 20 per cent increase compared to how much it cost before the Russia-Ukraine war.
"The increase in wheat and flour prices has had big impact, including the increase in the bread production cost and the cost that has to be incurred by the consumers,” he said, indicating that 700-gramme bread that was priced at Rwf700 now costs Rwf1, 200, while 1 kilo of bread costs Rwf1, 800 from Rwf1, 500 before.
Meanwhile, The New Times observed that even the traders that did not increase the price of bread and other wheat flour derived products, reduced their size as an attempt to prevent incurring losses from the rising wheat costs.
Russia and Ukraine as major global wheat suppliers
According to "the Impact on Trade and Development of the War in Ukraine,” a rapid assessment by the United Nations Conference on Trade and Development (UNCTAD) of March 2022; together, Russia and Ukraine represent 27 per cent of the share of global trade in wheat.
Russia accounted for 18 percent (or 32.9 million tonnes) of the global wheat supply, while Ukraine accounted for 9 per cent in 2021.
The assessment indicated that in 2018–2020, Africa imported $3.7 billion in wheat (32 per cent of total African wheat imports) from the Russian Federation and another $1.4 billion from Ukraine (12 percent of total African wheat imports).
And, as many as 25 African countries, including many least developed countries, had been importing more than one third of their wheat from the two countries, and 15 of them imported over half.
For instance, Benin has been importing from Russia 100 per cent of the wheat used in the country, while Rwanda has been sourcing from Russia about 64 per cent of the wheat needed in the country.
In March this year, Prime Minister Edouard Ngirente told journalists at a press conference that Rwanda was looking for alternative sources of wheat supply after the Ukraine crisis disrupted global prices and supply of the commodity.
In 2020, Rwanda spent over $44 million (Rwf44 billion) on wheat imports, a rise from $40.8 million (about Rwf40 billion) that it spent a year before, according to data from the Ministry of Trade and Industry.
On the basis of volumes, Rwanda imported more than 177,740 tonnes of wheat in 2020, up from 159,350 tonnes in 2019.