What has happened to wheat prices 2022?
In early April, this article from the Guardian reported that world wheat prices had increased by 19.7% in March.
These price rises are mainly due to the Russia-Ukraine war which has meant disruption to exports coming from the region. It is thought that the region produces as much as a quarter of the world’s wheat exports. And this is why it has had a major impact on wheat prices.
In the UK we produce most of the wheat we consume domestically, but this global impact on wheat supplies is affecting all markets. With significant rises in wheat prices in the UK also reported.
Are further wheat price increases expected?
As long as the conflict continues, it is likely that wheat exports will continue to be impacted.
And this could mean global wheat prices remain high or even continue to rise.
It is thought that disruption to the supply chain and confidence in the market will both be contributory factors.
Which industries will be impacted by the wheat price rises?
This article from ITV highlights that 80% of the wheat used in the UK is grown domestically. So, whilst the UK isn’t significantly reliant on wheat supplies from Russia or Ukraine this doesn’t mean that impacts won’t be felt here.
The food industry and those involved are likely to be impacted by the wheat price rises. With higher prices for wheat likely to feed through into the cost of food in supermarkets etc.
A lot of the wheat grown in the UK is used for animal feed so it is also thought that costs of animal derived products such as milk and meat may also be impacted.
The higher costs may also impact the hospitality industry. With it expected that cost increases will have to be passed on to consumers.
Will prices of other goods also increase because of the conflict?
This BBC article reports that prices of fertiliser have also increased – in some cases trebled. Impacting on farmers who rely on fertilisers to grow crops. This could further impact food prices as well as cost bases increase.
And there have been wide reports of the costs of gas and oil increasing further due to the conflict. Prices were already at a high due to shortages caused by other factors and impacting everything from the cost of heating homes through to filling up your vehicle with petrol or diesel.
Russia is also a big supplier of metals. Many of which are used in everyday consumer goods. And as a result, we may see price increases if supplies of these are affected.
With the world also still recovering from the impact of the COVID-19 pandemic and the pressures that this has placed on supply chains and therefore costs, prices for many goods and materials have risen and we are seeing continued inflation and cost of living pressures.
What impact can rising prices have on insurance?
Wheat is just one of many commodities which has rapidly increased in price over recent months. Other goods such as those mentioned above; gas, oil, metals, fertilisers have also increased in prices. As well as many materials used in other industries such as construction. These price rises may be linked to the conflict in Ukraine or linked to the world recovering after the COVID-19 pandemic. But one thing is for certain, most people and businesses are facing a rising cost of living.
And these price rises can have an impact on your insurance. Two key areas to consider are:
Underinsurance
Underinsurance is another way of saying that you do not have enough insurance for your needs.
As the cost of goods rises, the value of the stock that your business holds also increases. So, it will be important to check that the limits set in your insurance policy are still fit for purpose and will provide adequate cover should you need to make a claim. If your insurance is not sufficient to cover the losses you have experienced, then you will find yourself in a position of being underinsured.
We are also seeing significant inflation in the cost of construction materials due to a range of factors. This means things like rebuild costs will be increasing. So, you will need to be mindful of this is if you have buildings insurance for example. On a property or buildings insurance policy most policy conditions will require the sum insured to be the full rebuild cost of the property. With rebuild costs increasing you should ensure that your policy limits are still sufficient to avoid underinsurance. Check if your policy follows indexation and you should also regularly check rebuild costs yourself.
The risk of theft
As costs increase and there is pressure on the cost of living, incidents of theft typically increase as well.
Goods having a higher price makes them more attractive to thieves. And theft may also increase as a direct impact of higher living costs.
You may want to consider extending your insurance to things you wouldn’t necessarily have insured in the past. We recently looked at fuel as a good example of this.
And be mindful that whilst theft can be opportunistic, there is also the potential risk of employee theft from within your business.
Protecting your business from any losses because of criminal activity will become a focus.
At Anthony Jones we understand that businesses are currently facing many challenges. But don’t let arranging your business insurance take a back seat as you deal with other aspects of running your business. Insurance could be more important than ever to the success of your business. So, get in touch with us at Anthony Jones – we are insurance experts and exist to take care of your insurance needs. For expert advice that you can rely on get in touch with us on 020 8290 9080 or email us at business@anthonyjones.com.
