Tough Times Ahead: The Impact of Russo-Ukrainian Conflict on Food Prices

Written by Athar Hadiyan Al Ghifari

The Russo-Ukrainian Crisis that has sparked since late February could trigger a food crisis. As countries have begun to impose variations of sanctions and trade-cutoff on Russia and fighting began in Ukraine, the disturbance on food commodities could mean rising food prices. After two weeks of fighting, wheat prices have jumped 5.35 per cent from pre-war prices. Meanwhile, the Food Agriculture Organization (FAO) Food Price Index already hit a record high in February. Even before the conflict began, food commodities disruptions had been a concern primarily because of climate change and supply chain issues.

The two countries, Russia and Ukraine combined, dominate a quarter of all grain supplies or 102 million tonnes. Russia and Ukraine–both called the breadbasket of the world–contribute to 25 per cent of the world’s wheat supply, while other agricultural export products are corn and barley. It is important to consider that wheat, a staple in many countries, is responsible for 20 per cent of human calories consumption. The problem arises because the planting season in Ukraine could be suspended due to infighting and farmers’ shortage. Meanwhile, getting wheat through Russia could be hard because of sanctions and trade cut-offs. 

Fuel shortage could also worsen the food crisis as Russia–the top exporter of oil and natural gasses–also faces trouble exporting. On March 8th, Brent crude oil price index closed at $128 per barrel. On top of that, fertilizer has also taken a hit. Along with Belarus, Russia is one of the top exporters of nitrogen-based nutrients such as urea and ammonia. The supply of fertilizer needed to plant crops is predicted to be disrupted as trade boycotts and Black Sea Port closure occur. The price of fertilizer has also surged 29 per cent according to the New Orleans index. Fertilizers’ importance for agriculture could mean that when fertilizers supply is in shock, costs are rising for farmers everywhere. 

Rising food prices could endanger food security, especially in third world countries. The more developed countries such as Canada, The United States, and Australia will likely limit their export to satisfy their domestic demands, leaving poorer countries alone. Poorer countries across the Middle East and North Africa are very dependent on wheat and grain imports. Egypt, for example, is dependent on Russia and Ukraine for 86 per cent of its wheat. The crisis means that imports could burden the bread subsidies. More than one-third of Egyptians already fall below poverty lines and rising bread prices will only make the poor poorer. Such a sudden shock in food prices may also ignite political tension. As urban poverty increases, rising food prices is a recipe for a riot. The Arab Spring in Egypt, Tunisia and across the Arab World were all triggered by rising food prices. West Africa–one of the top importers of cereals products–could also be vulnerable, as millions of poor consume instant noodles.  

According to the FAO officials, Qu Dongyu, prolonged conflict in Ukraine could detriment more economically vulnerable countries. The FAO also estimates that more than 8-13 million people worldwide will face undernourishment in 2022-2023 if food export from Russia and Ukraine stops entirely. Even before the pandemic, food insecurities have deepened because of rising energy prices and climate issues. In addition to that, the World Food Programme has already announced that they are going to feed fewer people due to problems in supply.

As food prices began to climb, countries started to look at alternatives. Bangladesh, for example, has developed self-sufficiency in essential crops including rice. Meanwhile, other countries, such as Hungary and Turkey, have turned to protectionism to secure their domestic supply. However, the problem is in the poorest countries with little to no capacity to produce agricultural commodities. In that case, the impact could be devastating as more people could be on the brink of famine. This crisis would likely be different from other crises such as the 2010-2012 food crisis. After all, we are facing global pandemics, rising energy prices, and a conflict on the world’s breadbasket all at the same time. 

Russo-Ukrainian War–the war that was sparked due to the Euromaidan Protests of 2014, but escalated on the 24th of February 2022–disrupted, halted, and destroyed the current global food supply chain. The prior global food supply chain depended heavily on trade from and into Russia and Ukraine; with the escalation of the Russo-Ukrainian War, 20% of global caloric consumption would be in danger due to Russia and Ukraine both contributing up to 25% of the global wheat supply. Russia, as the aggressor of the current conflict, argued that the conflict was intended to defend Russian national interests–preventing the expansion of NATO, securing ethnic Russians outside of the boundaries of Russia, and expanding the reach of Russian natural gas to Europe. While the conflict is within the national interest of Russia, the Russo-Ukrainian War challenged the interest of the international community.

The disruption of the global food supply chain is one of the challenges posed to the interest of the international community by the current Russo-Ukrainian War. Peace, free flow of trade, and international cooperation are fully within the interest of the international community as they would foster economic growth, prevent hunger, and stop preventable deaths. The current dichotomy between Russia’s national interests and the international community’s interests would lead to unforeseen consequences if left unanswered.

Let’s hear what our members have to say about this issue.

The disruption of the global food supply chain is one of the challenges posed to the interest of the international community by the current Russo-Ukrainian War. Peace, free flow of trade, and international cooperation are fully within the interest of the international community as they would foster economic growth, prevent hunger, and stop preventable deaths. The current dichotomy between Russia’s national interests and the international community’s interests would lead to unforeseen consequences if left unanswered.

By: Vitra (IAOD)

The invasion of Ukraine along with the economic sanctions and trade cut-offs on Russia has impacted many economic sectors across the globe, like exports of wheat and oil. While the solution to those reliant on exports from these countries are limiting imports and saving supplies for domestic demands, some supplies like fertilizer, oil, and wheat could experience severe shortages since Russia is a top exporter of those resources and, along with Ukraine, is called the breadbasket of the world. Satisfying domestic demands can also be difficult for a poorer country since countries like Egypt and those located in West Africa are reliant on wheat for their food. If this continues, civil unrest on the basis of food shortages might happen again, akin to the Arab Spring of the 2010s. All in all, looking at the global impact of a conflict, it is important to find out the most impacted nations and people as well as to see beyond the economic disasters to uncover the human tragedy that can unfold.

By: Dazva (MCD)

References

Al Jazeera. (2022, March 11). Poorer nations in Asia, Africa, middle east face food crisis: Un. Food News | Al Jazeera. Retrieved March 19, 2022, from https://www.aljazeera.com/economy/2022/3/11/food-crisis

Durisin, M., Okov, S., & Simon, Z. (2022, March 4). Food Protectionism Is Spreading as Hungary Bans Grain Exports. Bloomberg.com. Retrieved March 17, 2022, from https://www.bloomberg.com/news/articles/2022-03-04/governments-step-in-to-protect-food-supplies-as-prices-spike

The Economist Newspaper. (n.d.). How the invasion of Ukraine will spread hunger in the Middle East and Africa. The Economist. Retrieved March 19, 2022, from https://www.economist.com/middle-east-and-africa/how-the-invasion-of-ukraine-will-spread-hunger-in-the-middle-east-and-africa/21808072

Horowitz, J. (2022, March 14). War has brought the world to the brink of a food crisis. CNN. Retrieved March 19, 2022, from https://edition.cnn.com/2022/03/12/business/food-crisis-ukraine-russia/index.html

Swanson, A. (2022, February 3). Food prices approach record highs, threatening the world’s poorest. The New York Times. Retrieved March 17, 2022, from https://www.nytimes.com/2022/02/03/business/economy/food-prices-inflation-world.html

Tidey, A. (2022, March 17). Record high food prices to rise further as Ukraine War Weighs in. Euronews. Retrieved March 19, 2022, from https://www.euronews.com/my-europe/2022/03/17/global-food-prices-had-already-hit-record-high-then-russia-invaded-ukraine