White House Banks on ‘Price Signals’ to Avert Food Shortage

(Bloomberg) -- U.S. farmers will respond to “price signals” and increase their production to avert any domestic food shortage stemming from Russia’s invasion of Ukraine, the White House’s chief economist said Monday.

“We don’t expect a shortage here, because we are net exporters,” Cecilia Rouse, the chair of President Joe Biden’s Council of Economic Advisers, told reporters at a briefing. “But we are acutely aware of the fact that there are regions in the world that depend heavily on exports of wheat in particular and other grains from Ukraine and Russia.”

She predicted that American farmers would adjust and increase their planting to take advantage of higher prices.

“With the price of food rising, they will be responding by doing -- making additional plantings and trying to take advantage of the increased price signal,” she said. “So the market will work as the market will work.”

The war in Ukraine is not only disrupting agriculture in one of the world’s breadbaskets but also affecting the international market for fertilizer, in which Russia is a top supplier. The country accounted for almost a fifth of the world’s exports last year.

Read more: Fertilizer Prices Extend Rally to Stoke Food Inflation Fears

Prices for basics such as bread, meat and cooking oils have jumped since the Russian invasion last month, exacerbating existing supply-chain problems caused by the pandemic.

©2022 Bloomberg L.P.