The ongoing conflict in Ukraine between Russia is causing an increase in food prices in the United States, which is causing farmers to be concerned about planting more.

• The cost of wheat is increasing at a faster rate than the cost of input, according to Nicole Berg, owner of a 21,000 acre farm in Washington state.
• Farmers, like Berg, must make a difficult choice: Should they increase their crop production without certainty that prices will remain stable?
• If the Ukraine crisis suddenly disappears, farmers may be left "holding the bag," according to agricultural economist Scott Irwin.

To make farmers like Nicole Berg, the owner of a 21,000 acre farm in Washington state, happy, it is important to address the rising costs of fuel and fertilizer, which are eating into their profits.

In a recent interview with CNBC, Berg stated that the current problem is that input costs are increasing at a higher rate than the price of wheat.

Like many farmers, Berg faces constraints in the agriculture equipment market due to supply chain disruptions that delay orders of essential machinery for planting and harvesting.

Berg stated that in order for him to have money coming out, they must put down the deposit, but he may not receive the no-till seed drill until possibly the fall of 2024.

During the earnings call last month, stated that major equipment order books for the upcoming year are mostly filled.

Although spring wheat planting is imminent, winter wheat was already sown in late 2021.

Farmers in states that produce spring wheat, including North Dakota, Minnesota, and Montana, must make a difficult choice: Should they increase their planting of crops, despite uncertainty about price stability?

If the Ukraine crisis disappears unexpectedly, farmers may be left in a difficult situation, as Scott Irwin, an agricultural economist at the University of Illinois, pointed out.

Despite China increasing its agricultural commodities supplies, U.S. wheat production has been decreasing, dropping 35% from its 2008 high, as per the USDA.

According to Irwin, in the event of a crisis resulting in a significant loss of wheat supplies worldwide, countries like the United States will reduce their reserves.

One option for the U.S. to address the disruption of Russian and Ukrainian wheat exports due to war is to turn to countries like India. However, experts caution that high freight and transportation costs make this scenario less probable.

Although some parts of the Mideast are facing bread shortages, the U.S. currently has no signs of a shortage. However, the rising cost of wheat-based products is contributing to inflationary concerns in the American economy.

Given that they produce specialized wheat-based products, such as cereal, RBC Capital analyst Nik Modi stated that the companies with the most to lose are those that specialize in wheat production.

The prices of bread have risen by 10%, according to Modi, who also noted that cereal is now 10% to 15% more expensive than it was a year ago.