The global food supply has been threatened after the conflict in Ukraine paralyzed crucial Black Sea supply routes and the imposition of hard-hitting sanctions on Russia forced many countries into food protectionist policies.
This conflict has sent commodities, including energy and metal prices, soaring with the risk of severe disruption to markets as the war continues.
As the price of key food staples continue to rise, governments are starting to take steps to safeguard domestic supplies and keep inflation down.
The price of wheat has skyrocketed since the start of the year and worsened since Russia invaded Ukraine on Feb. 24.
Ukraine and Russia are, respectively, the third and eighth-largest wheat producers in the world, according to the United Nations Food and Agriculture Organization (FAO), and together account for almost a third of the world’s wheat and barley exports.
With Ukraine’s ports out of service and traders steering clear of Russia as a result of financial sanctions, it has become more difficult and costly to source grain cargoes.
The FAO said that it is critical that global food markets remain open and uninhibited.
“Reductions in import tariffs or the use of export restrictions could help to resolve individual country food security challenges in the short term, but they would drive up prices on global markets,” he said.
Protectionist measures had already been in place since 2020, when the pandemic sparked a historic trend of supply shortages and high prices, which the Ukraine invasion has exacerbated.
The Russian government introduced a temporary ban this week on grain exports to its neighbors in Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
Moldova, Hungary, and Serbia have also announced a ban on some grain exports, while Indonesia and Malaysia, one of the biggest cooking oil producers, are tightening controls over palm oil shipments due to labor-related production problems.
Egypt on March 11 announced a ban on exports of staples including flour, lentils, wheat, and pasta for three months, while Argentina and Turkey also moved to increase control over their local products.
Many countries in Africa, Asia, and the Middle East are highly sensitive to prolonged food shortages.
About 70 percent of Egypt and Turkey’s wheat supply comes from Russia and Ukraine, while 90 percent of Lebanon’s wheat and cooking oil imports comes from Russia alone.
Poorer countries in regions like in Africa rely on overseas supplies to subsidize bread for their growing populations.
Ukraine is a key exporter to Asia, while Russia supplies most of Africa’s wheat consumption.
African countries imported $4 billion worth of agricultural products from Russia in 2020.
Nigeria is taking measures to lower its dependence on Russia, but the disruption in the food supply chain is reverberating further east.
Ukraine was the second largest source of wheat for Asian countries such as Indonesia in 2021.
The soil of Ukraine’s is incredibly fertile. The country has historically been described as the “breadbasket of Europe,” with its ability to provide food for half a billion people.
Around 32 million hectares of land is cultivated every year in the country and crops form the bulk of Ukraine’s national exports.
Experts say that countries reliant on Ukrainian wheat could face shortages as early as July.
If record food prices continue to climb at this rate, there is a real risk that people will go hungry.
Russia produces almost 40 percent of total global exports of sunflower seed, safflower, or cottonseed production and 18 percent of the world’s exports of wheat and meslin, according to the International Trade Centre.
Ukraine, on the other hand, produces 18 percent of the world’s sunflower seeds, safflower, and cottonseed oil; 8 percent of its wheat and meslin, 12 percent of its barley; and 13 percent of the world’s corn.
Russia, the world’s biggest producer of fertilizer, is threatening to halt its exports of nutrients, which may further push up costs for farmers around the world.
Ammonium nitrate, urea, and potash are important nutrients for major commodity crops such as corn and soybeans.
Natural gas, which is key to producing fertilizer from nitrogen, has gone up in price due to sanctions against Russia.
Western sanctions on Belarus have disrupted the major potash supplies from there as well, making the situation worse.
Meanwhile, in the West, as the ongoing conflict in Eastern Europe leads to higher costs for livestock feed and fertilizer, the price of dairy, meat, and U.S. and Canadian wheat exports have been driven up.
The latest price surge comes at a time of drought in South America that has already reduced soy bean supplies, which is reducing global livestock feed supplies.
U.S. wheat futures rose in March after posting sharp declines in the previous two sessions as traders assessed the latest developments in Ukraine, which stills remain volatile.
Grain traders are looking at knock-on demand for other suppliers including the European Union, Canada, and the United States.
Time is also running out for Ukraine’s spring sowing season, the regular window for which runs in the first 10 days of March.
Analysts say that the length of the conflict could determine how far food prices will rise, as planting in Ukraine needs to be fully completed in the last week of April.
