Sorting by

×

Impact on food supply due to Ukraine war:

In the early hours of 24 February 2022, Russia launched a full-scale military invasion of Ukraine, resulting in civilian deaths and injuries, as well as the destruction of key infrastructure . As a result, the United States, Europe, and many other Western countries (eg, Canada and Australia) have imposed increasingly comprehensive sanctions targeting individuals, banks, corporations, and large state-owned companies, as well as exports . At the same time, the war has dealt a significant blow to commodities markets, especially food and energy, affecting global patterns of trade, production and consumption, keeping prices at historically high levels by the end of 2024. thus threatening global food security.
Indeed, in the context of globalized agricultural markets and as a war between two major players in the global food and fertilizer industries, the war is causing widespread concern about global food security . Despite their limited position in the global economy, accounting for approximately 2% of global GDP, both Russia and Ukraine are considered ‘global breadbaskets’ and are significant producers and exporters of important agricultural commodities, minerals, fertilizers and energy, with exportable value.

Immediate Effects of War on Food Security :

The war has a multitude of direct and immediate consequences for food security, disrupting harvesting and shipping and severely affecting key supplies and pricing . First, military actions could have both short- and long-term consequences on the ability to transport agricultural products in and out of Ukraine’s borders, especially if port facilities and railroads are destroyed. In fact, the war immediately affected grain shipments from Ukraine, mainly for maize, usually in the spring and early summer. In fact, 95% of Ukrainian grain exports are shipped by sea through the ports of Odessa, Mariupol and Kherson, which have suffered significant damage. In addition, all Black Sea ports have been blockaded, stopping most Ukrainian exports. The lack of an operable railway system would complicate the shipping of grain by rail even if the inland transport infrastructure remained intact. For example, according to Reuters , on 17 May 2022, four traders announced that around 300,000 tons of Ukrainian wheat contracted by the Egyptian state grain buyer for delivery in February and March were stranded in Ukraine, in a port was detained and four others need to be loaded .

Indirect effects of war on food security :

War also has some indirect and wider consequences. First, prices of essential inputs, such as fertilizers, are reaching near-record highs . As a result, many farmers around the world, such as those in the United States, are replacing high-cost fertilizer-requirement crops, such as wheat and corn, with low-fertilizer-requirement crops, such as soy. Since soybeans are primarily used in animal feed and biofuels, this could exacerbate current supply shortages and increase the price of bread, cereals, and other important foods . Similarly, fertilizer shortages and high costs can have negative effects, especially in developing countries where price effects can severely limit use, and result in reduced global supply and yield reductions during record global prices. may occur.

The impact of the Ukraine crisis on global agri-food markets :

After the dissolution of the Soviet Union in the early 1990s, agricultural productivity and production declined, and Russia and Ukraine became net food importers . However, after intensive modernization and mechanization during the past three decades, Russian and Ukrainian agricultural production and export of food goods have increased significantly, making the region the bread basket of the world. Both countries are now among the world’s top producers of various agricultural products, mainly cereals and sunflower oil. Together, in 2020, they account for 72.7% of global trade in sunflower oil and seeds, and 34.1% of global trade in wheat. About 12% of the world’s total calorie trade is exported by Russia and Ukraine.

The effect of the war on the global grain market :

With regard to cereals, Russia and Ukraine’s contribution to the global supply is substantial, particularly for barley, wheat and maize. Between 2016/17 and 2020/21, the two countries accounted for 19%, 14% and 4%, respectively, of global production of these crops. In 2021, Russia and Ukraine to be among the top three global wheat and corn exporters

Similarly, due to economic sanctions imposed on Russia, there is considerable uncertainty about the future prospects of Russian exports . The initial production outlook for 2022/23 winter crops is favorable in both countries. However, as noted above, the war may damage agricultural operations in Ukraine, preventing farmers from tending to their farms, and from harvesting and selling their products .

The impact of the war on the global fertilizer market :

Despite efforts to reduce nutrient losses to the environment, fertilizers are still an important part of agricultural productivity . In general, farmers must use three main types of mineral fertilizers to guarantee crop growth: nitrogen (N), phosphate (P), and potash (K). All three of these mineral fertilizers are marketed globally, and their supplies are geographically concentrated and controlled by a small number of miners (P and K) and a large group of chemical businesses (N) .

Russia and Belarus are important potash mining and producing countries, and Russia is a substantial nitrogen supplier. About one-sixth of the world’s supply of potash fertilizers is exported by Russia, as are more than one-tenth of nitrogen fertilizer exports and about one-sixth of compound fertilizer exports (containing two or more nitrogen, potassium, and phosphate) . In the same year, Belarus accounted for about 17.6% of the global potash production (K) . Both Russia and Belarus are part of a cartelized potash market that accounts for a third of worldwide exports and determines the price of potash on the global market (the other half includes Canada and the USA) . In addition, Russia is a major natural gas supplier, which is the primary raw material for nitrogen fertiliser.

Leave a Reply