Russia's Invasion Of Ukraine Makes Wheat Expensive, Economist: Government Needs To Find Other Suppliers Such As China, US, And Australia

JAKARTA - Economist Center of Economic and Law Studies, Bhima Yudhistira, said the government should start anticipating the increase in the price of wheat which is the raw material for processed foods as a result of the conflict between Russia and Ukraine.

"The effect of a shortage of wheat or disruption of the wheat supply chain from Russia and Ukraine can make producers continue to increase the price of wheat to consumers. This means that instant noodles and bread will be more expensive", said Bhima, quoted from Antara on Wednesday, March 2.

The government through the Ministry of Trade needs to look for alternative wheat suppliers from other countries such as Australia, the United States, and China, by signing long-term contracts to ensure supply and prices of wheat remain stable.

"The role of the government and Bulog (Logistics Agency) is important to assist and facilitate importers to find countries that are ready to supply wheat. The Ministry of Trade is also expected to facilitate wheat importers to secure prices", he added.

He also asked the government to communicate with processed food and beverage business actors so as not to pass on price increases to consumers.

"So I ask for understanding from entrepreneurs that the current situation is not all consumers are ready to accept price increases because it can affect purchasing power. Some entrepreneurs already understand that so they choose to cut profit margins rather than increase selling prices", he said.

Producers of alternative food substitutes for wheat such as rice flour and corn can also take advantage of the limited imports from Ukraine and Russia.

"So that dependence on imported wheat can also be reduced gradually with local food productivity that is more dominant and increasing", he said.​​​​

Apart from wheat, it is estimated that the conflict between Russia and Ukraine could disrupt the supply chain of other commodities such as oil and minerals so that their prices increase and cause inflation.