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#Analize / Mălina Mîndruțescu

The Ukraine conflict is creating a food crisis

In today’s interconnected world, any geopolitical conflict that is sparked across the globe, creates far-reaching and long-term consequences, that go well beyond the battlefield.

In the third week since Russian forces invaded Ukraine, the repercussions have been massive – from sanctions to a hike in energy prices, at gas tanks, supermarkets and so on.

And, the repercussions of this war are bound to have a long-lasting effect on the global economy – from increased hurdles and disruptions in the supply-chain process to a worldwide energy crisis, and now, even a food problem.

“Together, Ukraine and Russia account for nearly 30% of wheat, 17% of corn and over half of sunflower seed oil exports. The conflict-induced bottlenecks at Black Sea ports — where cargo vessels have been struck by Russian rockets — and other complications of war have slammed Ukrainian exports.

Boycotts of Russian ports by shipping companies and the knock-on effects of sanctions have also disrupted the flow of foods and feeds from Russia — creating problems that could grow as the Kremlin now threatens to impose export controls on some food commodities”, says a Washington Post newsletter, reporting on the food crisis.

Wheat prices shot to a record $12.94 per bushel, and are up an astonishing 70% over the last month, as measured by a type of futures contract on the Chicago Board of Trade, according to an Axios report. Ukraine alone supplied 12% of global wheat before the war, and was the biggest producer of sunflower oil.

About two-thirds of the country’s wheat exports had already been delivered before the invasion, but the rest is now blocked, and farmers may be unable to continue with spring planting, or take in grain harvests in the summer, the Guardian reports.

While the Ukraine conflict rages on, the world is quickly entering a food crisis, with prices soaring and millions in danger of severe hunger, as the war threatens supplies of key staple crops. With food prices already high, as a result of the Covid19 pandemic, the Russian invasion of Ukraine has only exacerbated an already concerning reality.

This week, the UN Food and Agriculture Organization (FAO) warned that, if this pace continues, the world could be nearing a food crisis. The United Nations already warned that record global food costs could surge another 22% as war stifles trade and slashes future harvests.

In addition to the world’s reliance on crop exports from Ukraine and Russia, there are around 50 countries that depend on the two countries for their wheat supply, especially poorer regions from North Africa, Asia and the near east.

As it is usually the case in times of crises, it is the poor and the less fortunate countries and people who are bearing the brunt of economic sanctions and measures, and of various other developments, that spring up from this conflict. Therefore, price increases, rising energy prices and other economic hurdles are hitting countries that had already been struggling financially, with some even facing debt crises during the pandemic.

Global food prices are at all-time highs, with a benchmark UN index soaring more than 40% over the past two years. Food insecurity has doubled in that period, and 45 million people are estimated to be on the brink of famine. Agricultural markets are also soaring, while corn and soybeans are trading near multiyear highs, according to a Bloomberg report.

agriculture

Photo source: Bloomberg

 

In developing countries, food systems have reduced their capacity to cope, as a result of the health crisis. “Having Covid-19 for two years has weakened the resilience of food systems”, says Maximo Torero, the chief economist at the FAO, one the world’s foremost experts on food and hunger, in an interview with the Guardian.

In a BBC programme, David Beasley, who runs the World Food Programme, has said that the number of people facing potential starvation worldwide had already risen from 80 million to 276 million in four years prior to Russia’s invasion, due to what he called a “perfect storm” of conflict, climate change and coronavirus.

In the short run, the FAO says, large grower countries — Australia, Argentina, India and the United States — could make up for a portion of the grain shortfalls from Ukraine and Russia. But important factors could worsen the problem.

If the war halts planting in the rich, black soils of Ukraine, wheat shortages will worsen in the coming months. The FAO’s preliminary assessment is that, due to the war, 20% to 30% of wheat, corn and sunflower seed will either not be planted or go unharvested during Ukraine’s season in 2022-2023.

In order to handle the backlash of these developments and guard their food supplies, states are turning to trade and food protectionism. Keeping crops closer to home will only prolong food inflation, experts say.

Hungary, Indonesia and Argentina are among a cluster of countries that have imposed trade barriers on agricultural exports ranging from wheat to cooking oil, in an attempt to suppress domestic prices and safeguard local food supplies after Russia’s invasion led to widespread panic about shortages.

Indonesia has set new limits on palm oil exports to control prices. Hungary banned all grain exports last week, Serbia said it would ban exports of wheat, corn, flour and cooking oil.

food crisis grains

Photo source: Associated Press

 

“On Thursday, Egypt — a country 80 percent reliant on Russian and Ukrainian wheat — imposed controls on grain exports as the price of subsidized bread has already started to creep up”, says the Washington Post.

And, if the situation is prolonged, higher food prices could even trigger global unrest. During the financial crisis of 2008, crises broke out in Haiti, Bangladesh and many of the uprisings that led to the Arab Spring are due to a level of resentment related to the high cost of food.

Now, this pattern of unrest seems to be repeating. In southern Iraq, where poverty is more acute, protests broke out due to surging prices.

Inflation and supply chain hurdles caused by the pandemic, and now, exacerbated by the war in Ukraine, will only have a more lasting and violent effect. Aiding countries will become more expensive, as more countries are falling into poverty, while the number of people on the brink of famine has more than doubled since 2019, from 27 million to 44 million, according to Beasley.

For more True Story Project analyses on the Ukraine invasion, please click here and here.

 

Photo source: Getty Images

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