The new report from the Food and Agriculture Organization of the United Nations (FAO) begins with an uncomfortable truth: International agricultural markets have weathered pandemics, wars, extreme weather events, and energy crises remarkably well so far. However, this does not mean they can be reliably planned.
" The State of Agricultural Commodity Markets 2026 " examines how shocks are transmitted through global trade networks for wheat, corn, and rice. The report arrives at a nuanced conclusion: international trade is not only a risk but also a crucial part of the solution. Countries with multiple suppliers, functioning transport routes, sufficient stockpiles, and open markets are significantly better able to absorb crop failures than those reliant on a limited number of sources.

This analysis is directly relevant for Austria's bakeries, confectioneries, and mills. While flour is a relatively small cost factor in finished bread, the price and availability of grain are sensitive to political decisions, weather events, energy prices, transport costs, and international market sentiment. Furthermore, raw materials such as sugar, cocoa, nuts, vegetable oils, and dried fruit are significantly more dependent on imports for Austria.

Global markets are more stable than their reputation suggests.

Global trade in food and agricultural commodities has expanded massively since 2000. According to the FAO, its value increased from around US$400 billion to approximately US$2 trillion in 2024. The trading volume more than doubled during the same period.
Even during the 2009 financial crisis and the Covid-19 pandemic, agricultural trade remained relatively robust. While global trade as a whole temporarily collapsed, food continued to be shipped across borders. Production volumes, trade flows, and sources of supply usually adjusted within a few months.

The FAO's analysis of weather events shows that exports can decline immediately after a production shock. In many cases, however, trade flows recover within six months. The organization considers this adaptability to be evidence of the resilience of the international system.

For an Austrian bakery, this initially sounds reassuring. Even if a harvest fails in a key growing region, wheat doesn't necessarily disappear from the European market. Other countries of origin can replace some of the missing quantities. However, this is contingent on transport routes functioning and the affected countries not imposing political restrictions on their exports.

A few exporting countries dominate the grain market.

The biggest structural problem lies in the high degree of concentration. General agricultural trade has become broader and more diverse over the past decades. However, a few large producers continue to dominate wheat, corn, and rice.
Australia, Canada, Russia, Ukraine, and the USA together accounted for more than 60 percent of the global wheat export value in the trade structure examined by the FAO. For maize, Argentina, Brazil, France, Ukraine, and the USA accounted for almost 80 percent of exports. For rice, India, Pakistan, Thailand, the USA, and Vietnam represented around three-quarters of global exports.

This concentration of production creates low costs and efficient supply chains in normal years. However, if several major production regions fail simultaneously, it becomes a weak point. A drought in North America, floods in Europe, and harvest problems in the Black Sea region could exacerbate each other.
The FAO therefore models not only individual crop failures, but also simultaneous shocks in several major growing regions. Such scenarios are explicitly not forecasts. However, they demonstrate how strongly the effects can be transmitted through trade links. Even wealthy importing countries would be affected if poorer countries suffered significantly more from supply shortages and rising prices.

Export bans exacerbate the crisis

The FAO is particularly critical of unilateral political actions. Governments often react to rising food prices with export restrictions to protect their own populations. For an individual country, this may seem understandable in the short term. However, if several major exporters decide on such measures simultaneously, the global market loses additional quantities.

During the global food price crisis of 2007 and 2008, trade policy interventions were responsible for a significant portion of the price spikes, according to the FAO. For rice, around 45 percent of the global price increase at that time was attributed to protectionist measures. For wheat, changes in border controls accounted for approximately 30 percent of the increase.

This creates a self-reinforcing effect. Rising prices lead to export restrictions. These reduce the international supply, causing prices to rise further. At the same time, importing countries try to secure more goods through lower tariffs or additional purchases. This also increases the pressure.

During the pandemic, such an escalation largely failed to occur. Many countries eased trade restrictions instead of permanently restricting it. The FAO sees this as a key reason why supplies could be maintained despite lockdowns, staff shortages, and logistical problems.

Austria produces a lot of grain and yet trades intensively

Austria is starting from a comparatively solid position. In the 2024/2025 marketing year, around 4.9 million tons of grain were harvested domestically. This meant that 85 percent of Austria's grain needs could be met by domestic production. The self-sufficiency rate for durum wheat and common wheat combined was 87 percent, and for rye, it was 89 percent.

However, these figures do not mean that 85 or 87 percent of every Austrian loaf of bread is automatically made from domestic grain. Austria imports and exports significant quantities simultaneously. In 2024/2025, approximately 3.1 million tons of grain were imported and 2.4 million tons exported. For durum wheat and common wheat alone, domestic production of around 1.56 million tons was offset by imports of nearly 1.47 million tons and exports of 1.28 million tons.

Behind this lie different qualities, uses, supply contracts, and regional trade flows. Certain wheat varieties are needed for bread, pastries, pasta, or technical processing. At the same time, Austria sells quality grain and processed products abroad.
This interconnectedness does not contradict security of supply. Rather, it expands the available supply routes. The FAO explicitly warns against equating self-sufficiency with resilience. A country that relies solely on its own harvest is particularly vulnerable to domestic drought, flooding, or pest infestations. Robust supply is achieved through a combination of national production, multiple import sources, stockpiles, and functioning trade.

The 2025 harvest strengthened the domestic base

The 2025 harvest provided a good starting point for the Austrian flour and bakery industry. Agrarmarkt Austria expected a harvest of approximately 1.53 million tons of soft wheat, 6.8 percent more than in 2024. Domestic mills require around 650,000 tons of soft wheat for their annual milling needs. The rye harvest of approximately 132,000 tons also covered Austria's milling demand of around 90,000 tons. Overall, the milling grain harvest amounted to approximately 1.8 million tons, significantly exceeding the needs of the Austrian flour and bakery industry.

A physical shortage of domestic bread grain is therefore not currently the most pressing risk. Nevertheless, the sector remains vulnerable to price fluctuations. Austrian grain is not valued outside of the European and international markets. World market prices, futures markets, energy, fertilizer, storage, and transport all impact domestic costs, even if the grain used originates from Lower Austria, Burgenland, or Upper Austria.
The crucial question is therefore less about whether there is enough wheat available. For farms, what matters is the price, quality, and planning certainty with which flour and other raw materials are available.

Energy and fertilizers affect the baking industry on two levels

The FAO report pays particular attention to energy and fertilizer prices. Agriculture requires fuel, electricity, irrigation, and nitrogen-based fertilizer, the production of which is heavily dependent on natural gas. Rising energy prices therefore initially increase the cost of agricultural production. Subsequently, their impact spreads through mills, cold storage facilities, warehouses, transportation, and processing.

Bakeries and confectioneries are doubly affected by this situation. They pay higher raw material costs and simultaneously more for ovens, refrigeration, fermentation control, hot water, and branch logistics. Even if the grain price remains stable, the production of a loaf of bread can become significantly more expensive due to energy, personnel, packaging, and delivery.
Geopolitical disruptions along key shipping routes are particularly dangerous. The FAO report highlights the importance of international corridors for oil, liquefied natural gas, and fertilizers. Uncertainty on these routes increases freight, insurance, and transaction costs and can delay deliveries. For Austria, this affects imported inputs and ingredients, ranging from fertilizers and cocoa to vegetable fats, more than locally sourced wheat.

Cocoa, nuts and vegetable oils remain sensitive points.

The Austrian focus should therefore not be limited to bread grains. Confectioneries and bakeries process numerous products whose domestic production is low or practically non-existent.
Austria's self-sufficiency rate for oilseeds was 47 percent in 2024/2025. For vegetable oils, it was only 26 percent. Austria achieved 15 percent for nuts, which include other nuts. Rice reached a mere one percent.

These dependencies are at least as important for the confectionery industry as the wheat market. Chocolate, cocoa powder, almonds, hazelnuts, coconut products, dried fruits, and certain fats often react much more strongly to regional crop failures and international logistics than flour.

Austria's foreign trade figures also demonstrate its economic importance. In 2024, exports of preparations made from cereals, flour, starch, milk, and baked goods totaling approximately €1.78 billion were recorded. Imports of these products amounted to nearly €1.70 billion. Exports of cocoa and cocoa preparations increased by 36.7 percent year-on-year to around €989 million, while imports rose by 28.6 percent to approximately €814 million.
Austria's baking industry is therefore not only a buyer of internationally traded raw materials. It is itself part of a cross-border value chain and generates considerable export revenue with baked goods, confectionery and semi-finished products.

Supplies help, but they don't replace a strategy.

The FAO views stockpiles as an important buffer, but warns against excessive government reserves. Large stockpiles are expensive, cause losses in storage, and can distort market prices. According to the organization, historical attempts to permanently stabilize world market prices through extensive public stockpiling have been neither financially viable nor sustainably successful.

More sensible measures would be targeted emergency reserves, transparent information on available quantities, and flexible social assistance for particularly affected households. Austrian businesses can draw a practical lesson from this: Maximum stockpiling does not create security; rather, a coordinated procurement strategy does.
This includes multiple suppliers, traceable origin, clear quality agreements, and realistic supply ranges for critical ingredients. For flour, a long-term partnership with mills is often more valuable than switching to the cheapest supplier in the short term. For cocoa, nuts, and specialty fats, a second approved supplier can be crucial if one source becomes unavailable.

The collaboration between farmers, mills, and bakeries is also gaining importance. Variety selection, protein content, baking properties, storability, and regional processing cannot be determined only after the harvest. The more precisely the quality requirements are known along the entire supply chain, the easier it is to use Austrian grain specifically for high-quality baked goods.

Transparency becomes a competitive advantage

A key proposal from the FAO concerns improved market data. Following the food price crisis of 2007 and 2008, the Agricultural Market Information System was established. It collects information on the production, consumption, trade, and stockpiles of key agricultural commodities. The aim is to reduce uncertainty and prevent policy overreactions.
Transparency is also an underestimated resilience factor at the operational level. Knowing the raw material content, energy consumption, and contribution margins of individual products allows for earlier assessment of cost changes. Across-the-board price increases for the entire product range are often less effective than precise calculations based on recipe, production costs, and sales volume.

For a classic loaf of wheat bread, the price of grain is only one part of the equation. For chocolates, cakes, or pastries, cocoa, butter, nuts, fruit, eggs, and labor can have a significantly greater impact. Therefore, a global commodity shock does not affect every product equally.
Digitized inventory management, ongoing recipe costing, and traceable supply chain data are not purely administrative projects. They help businesses translate volatile markets more quickly into purchasing, product range, and sales prices.

Regionality needs economic substance

The FAO report also provides a strong argument for Austrian origin. Domestic production shortens supply chains, creates direct relationships, and reduces dependence on individual, distant export regions. It strengthens agriculture, milling, and food production within the same economic area.
Regionality alone, however, does not protect against global prices. Fertilizers, energy, machinery, packaging, and some seeds are traded internationally. Even domestic wheat bears these costs. Therefore, anyone who credibly communicates Austrian origin should not present it as a guarantee of permanently low prices.
Their value lies in other areas: traceable origin, reliable quality workmanship, regional value creation, and closer coordination between producers and processors. For artisan bakeries, this can lead to a clearer profile. Products made from defined grain varieties, regional milling partnerships, or long-term agricultural partnerships create added value that goes beyond the anonymous purchase of raw materials.

The opportunity lies in a broader concept of security.

The FAO's most important message for Austria is not autarky, but rather intelligently organized diversity. Strong domestic grain production remains the foundation. It should be supplemented by multiple European and international sources of supply, functioning storage facilities, robust logistics, and reliable trade rules.
This presents concrete opportunities for the baking industry. Long-term partnerships with Austrian mills and farmers improve planning reliability. Digital procurement and market monitoring make price fluctuations visible earlier. Energy-efficient ovens, heat recovery, and optimized production times reduce dependence on energy price shocks. Flexible recipes and alternative suppliers increase flexibility regarding imported ingredients.

This also presents a communicative opportunity. Security of supply, origin, and artisanal processing become tangible for consumers when companies explain specifically where their flour comes from, which mill processes it, and why consistent quality is not a given.

Austria has sufficient bread grain, efficient mills, and a long-standing baking tradition. However, the FAO report cautions against mistaking this advantage for invulnerability. The next crisis need not stem from another pandemic or war. It could be triggered by several poor harvests, a surge in energy prices, blocked transport routes, export bans, or digital disruptions.

Companies that understand their supply chains today, openly assess dependencies, and combine regional strength with international diversification will be better prepared. Security of supply doesn't begin when a raw material is missing. It begins with the selection of partners, with cost calculations, and with the decision of what quality a company wants to maintain even under difficult conditions.