Russia’s war on Ukraine threatens not only millions of Ukrainian lives, but those of Egyptians, Kenyans, Indonesians, and many more as the region is one of the leading global suppliers of grains, oils, and fertilizer. Russia and Ukraine are, respectively, the largest and fifth-largest exporters of wheat in the world. Ukrainian ports are closed. While some grain is still leaving Russia, ports on the Black Sea have come to a virtual standstill, as traders and shipping companies have halted new deals with the uncertainty around the conflict.
Breadbasket of the World
Russia and Ukraine are breadbaskets of the world. Their food exports account for about 12% of total calories traded in the world. Together, they export about 30% of the world’s wheat. War may disrupt the ability to harvest and transport food commodities as workers have been called to battle. Not only is the effect of war immediate but could harm future crop rotations if farmers are unable to harvest this season’s crops.
Ukraine and Russia also combine for 75% of global sunflower oil exports, accounting for 10% of all cooking oils. Ukraine accounts for about 17% of global corn exports, making it one of the major four world exporters of corn. The UN World Food Programme purchases more than half of their wheat from Ukrainian farms.
“Ukrainian wheat moved swiftly on the conveyor belt of international markets and to our humanitarian operations for other countries beset by war, such as Afghanistan, Sudan and Yemen, where millions teeter on the edge of starvation. That conveyor belt now turns in reverse, as the WFP mobilizes to assist more than 3 million Ukrainians inside and outside the country, at a cost of half a billion dollars over the next few months.” – David Beasley, Executive Director of the U.N. World Food Programme, 2020 Nobel Peace Prize laureate, and USGLC’s 2020 Tribute Celebration Honoree
Ukraine’s agricultural sector is not only threatened by war, but also by climate change. Ukraine’s Ministry of Environmental Protection and Natural Resources stated the country lost 570,000 hectares of winter crops due to prolonged droughts and unusually intense spring frosts induced by a changing climate. Ukraine’s agriculture sector generated around 9% of the country’s GDP in 2019, making agriculture a national economic priority for Ukraine.
Food for Ukraine
The Ukraine exodus is the fastest-growing refugee crisis in Europe since WWII, topping 2 million in 13 days, according to the UNHCR. In partnership with the U.S. Agency for International Development (USAID), the World Food Programme’s (WFP) emergency operation kicked into high gear in neighboring countries of Ukraine, where WFP has not operated since 2018. WFP and USAID have set up operations and hubs to provide food assistance and to support the increasing food needs among conflict-affected individuals in Ukraine and refugees crossing the border.
WFP plans to assist up to 3.1 million conflict-affected individuals in Ukraine, as well as 300,000 crisis-affected individuals in neighboring countries with USAID and other donor support. WFP is rapidly moving resources to the country; for example, a “WFP-contracted bakery delivered nearly 5 MT of bread—sufficient to meet the needs of 20,000 people—to hospitals in Kharkiv on March 5. WFP has also delivered 26 MT of high energy biscuits to Lviv for onward dispatch to Kyiv,” according to USAID.
Impact Around the World
Low-income countries who are already facing an uphill recovery from the global pandemic, eroded spending power due to inflation, and supply chain shortages are feeling the pain of higher food prices which are expected to be exacerbated by Putin’s senseless war on Ukraine. People in other regions of the world rely on these nations for their food supply. African countries imported nearly $7 billion worth of Russian and Ukrainian agricultural products combined in 2020. Over 50% of the cereals in the Middle East and North Africa are imported from Russia and Ukraine.
With approximately one-third of Egyptians living in poverty and millions depending on heavily government-subsidized bread made from Ukrainian grains, Egypt is the world’s largest importer of wheat. Cereals, including wheat, make up 75 percent of Indonesia’s imports from Ukraine at a time when flour consumption for noodles and bread is increasing, according to the Centre for Strategic and International Studies (CSIS), Indonesia’s oldest and leading think tank, hurting lower-income people. In addition to inflation which includes rising food prices, Ghana and Kenya are two countries quick to feel the impact as one-third of cereal consumption is made up of wheat. In Nigeria, food costs and transport comprised the majority inflation index at 57% and annual inflation is teetering at nearly 15%.
The U.S. Department of Agriculture Secretary Tom Vilsack recently noted that a lot of grains are “exported into North Africa and the Middle East, Lebanon, Yemen, Egypt, and Sudan.” The Secretary said USDA is assessing who will “provide the necessary food so that developing countries that are absolutely in need of that have access to it” in the form of various international aid and export programs.
The war could reduce food supplies just when prices are at their highest levels since 2011. Furthermore, droughts have caused poor wheat harvests in North America, and for soybean and corn yields in South America.
Shortly after Russia’s invasion of Ukraine, China announced an easing on longstanding import restrictions on Russian wheat as a way to show economic support to Russia while reinforcing China’s food security. China, the world’s largest grain importer, is facing historic grain production difficulties and has been massively increasing imports of grainto ensure a comfortable surplus for its 1.4 billion people at a time of food and commodity shortages globally. These circumstances and actions, coupled with anticipated high inflation for the rest of the year in food and energy costs are potential geopolitical triggers. China imports the vast majority of wheat from the United States and Canada, but that may shift in the coming years as a consequence of the current crisis.
Livestock and Fertilizer
Corn and grain additives are essential for feeding livestock, making up about half of their input costs, causing concern amongst farmers around the world. “In 2020, 14,575 million bushels [of corn] were used, with 38.7% forming a key component of livestock’s diet,” according to the National Corn Growers Association. With the potential for rising prices, including grain hitting a 14-year high, essential inputs for meat and dairy farmers may force lower profits or result in higher costs for customers. This would have a particularly tough impact on smallholder farmers in low-income economies, but also to farmers and ranchers globally.
Ukraine produced their largest amount of corn in 2021, as the crop benefits from higher yields and high international demand. Ukraine is a lead supplier to the EU for just under 60% of its corn and nearly half of a key component in the grains needed to feed livestock. Within the first two days of the Russian invasion, the price of grain for animal feed jumped 10% on the open market in Spain, where imported grains feed some 55 million pigs in Spain alone.
Russia, Ukraine, and Belarus are major producers of the natural gas nitrogen in the world, which is the chemical found in fertilizers like anhydrous ammonia, urea, and urea ammonium nitrate that are used to fertilize crops from Oklahoma to Kenya. In the United States, risk management tools based on crop and revenue insurance programs do a better job of protecting farm income than in the past, but farmers in low-income economies do not all have the same social and agricultural protection programs to weather the gyrations of the market and the consequences of war. As spring arrives and the ground wakes up, farmers around the world may face higher prices and restricted access to fertilizer due to supply chain challenges.
Russia’s invasion is further complicating an already volatile global environment and impacting the lives of citizens around the world – whether on the farm or at the market, pushing the prices of daily necessities up even more. The rapidity of increases in grain prices, as well as the reduction in supply, will also negatively impact suppliers of farm equipment and agriculture processors globally, and affect employment in all those industries. But hunger, potential famine and political instability are the most serious short-term concerns. Millions more lives will be uprooted around the world unless there is an immediate end to the conflict.