The Russian-Ukrainian conflict and its impact on food and regional security

Russia-Ukraine conflict might hugely impact the food and agriculture industry (Credits: Luck-o-matic, CC BY 2.0, via Wikimedia Commons)

Geopolitical Report ISSN 2785-2598 Volume 17 Issue 7
Author: Alex Sinelshikouv

Since the beginning of the special military operation of the Russian Armed Forces in Ukraine, political leaders and experts have been seriously concerned about the situation on the world food market. It is possible that several countries in North Africa and the Middle East may face a real threat of famine.

In 2021, Russia supplied grain to 95 countries. The largest buyers were Turkey, Egypt, Kazakhstan, Latvia, Saudi Arabia, Azerbaijan, Nigeria, Bangladesh, China. Russia accounted for 17% of world exports last year; wheat accounted for three-quarters of purchases. According to the Ministry of Agriculture of the Russian Federation, 32.9 million tons of wheat and meslin (a mixture of wheat and rye) were exported. Most of the exports are grade 4 grain. These are hard varieties that go to the production of cereals and pasta. Replacing Russian wheat is problematic. Since 2016, Russia has been the world’s largest exporter.

Ukraine is also an exporter. Wheat and butter from Ukraine were purchased by Egypt, Indonesia, China, Turkey, Pakistan, Bangladesh, Morocco, Tunisia, Yemen. Last year, according to the State Statistics Committee of Ukraine, exports amounted to more than 20 million tons, bringing the country $ 5 billion. Three western regions are specialised in wheat production – Kherson, Odesa and Vinnytsia. According to the Agribusiness of Ukraine resource, most of the elevators are concentrated in the centre of the country: in the Dnipropetrovsk and Poltava regions. The largest storage facility in the country, capable of receiving 2.3 million tons of grain, is located near Mariupol, where fighting is currently taking place.[1]

Ukraine conflict’s impact on food security and agriculture industry

It became clear from the first days of the operation that the events in Ukraine will directly affect world food security. On February 24th, 2022, the American agricultural commodities trader Archer-Daniels-Midland Co announced that it had closed its facilities in Ukraine, including an oilseed processing plant and an export grain terminal. At the same time, ADM manages a grain port terminal in Odesa, an oil extraction plant in Chernomorsk, five internal and one river elevators, and a trading office in Kyiv, where more than 630 people work.[2]

The situation was immediately aggravated due to military operations in the south of Ukraine, the entire port infrastructure of Ukraine on the Black Sea turned out to be inaccessible for trade due to security concerns. Although in February, a couple of weeks before the operation, a record amount of grain was exported from Ukrainian ports. From February 11th to February 14th, the shipment amounted to a record 867 thousand tons, significantly higher than last year’s figures. In the first half of February, 548 thousand tons of wheat (+ 100% by 2021), 98 thousand tons of barley (32 times more), 2247 thousand tons of corn (+100%) were exported from Ukraine.

Under these conditions, the prices of food wheat on commodity exchanges began to rise sharply, exceeding 1,000 dollars per ton to date. The situation in the food market caused a surge in publications of the world’s leading publications.

According to the authors of Thomson Reuters, the events in Ukraine will affect the most vulnerable economies of the Middle East, where bread is the basis of the grocery basket. Therefore, supply disruptions can put countries on the verge of starvation – now, grain and flour stocks are limited to a one-month horizon. “In the Middle East and North Africa, the consequences of the war in Ukraine could lead to millions more people ending up in “food poverty.” The region is particularly vulnerable to rising prices for basic foodstuffs due to inadequate local production and high levels of poverty, and anger over the cost of food fueled the Arab Spring protests in 2011,” analysts of the publication said.[3]

The Wall Street Journal wrote that the current operations of agricultural companies in Russia might have a broader impact on global food supplies. “Russia’s war in Ukraine involves two of the world’s largest grain powers, which is becoming increasingly important for feeding the growing and richer population of the world. The decline in Russian exports of food products, such as wheat, in addition to the likelihood of a decline in the harvest in Ukraine, could lead to serious food shortages around the world,” analysts interviewed by the publication noted.[4]

Moreover, Politico called China, one of the largest grain importers in the world, one of the beneficiaries of the current situation. According to the publication, Beijing will now import wheat produced anywhere in Russia (especially with additional control over Ukrainian supplies). Earlier, China restricted Russian imports only to wheat and barley produced in certain regions, mainly in the eastern parts of the country. The remaining supply to meet China’s demand mainly came from France, Australia and Canada. In the current situation, China will be able to import grain from any Russian territory to China, potentially displacing the European Union, Canada and Australia from the market.[5]

A similar reaction was noted in the statements of representatives of the political leadership of the leading participants in the world food market.

Egypt’s state news agency quoted Cabinet spokesman Nader Saad as saying that the country’s authorities, which is one of the world’s largest wheat importers, are working on a plan to purchase wheat in other regions, not in other regions Russia and Ukraine. At the same time, there are 14 approved countries from which Egypt can import wheat, while some of them are located outside Europe.[6]

Bulgaria’s Deputy Prime Minister said that Bulgaria would increase wheat stocks and buy enough grain from local producers to meet domestic needs for the year ahead due to the risks associated with Russia’s military operation in Ukraine and the volatility of grain markets. At the same time, Bulgarian grain producers have stated that the state may restrict wheat exports until the planned volume is purchased. Meanwhile, Bulgaria is one of the wheat exporters in the EU, currently experiencing additional export demand as suppliers seek to find new sources of grain, which they planned to ship from Ukraine and Russia.[7]

Hungary, one of the wealthiest grain-producing countries in Europe, has banned grain exports due to price increases caused by the military confrontation between Russia and Ukraine. “We need to prepare for the worst-case scenario. We have a grain reserve in the country for two years, and, there are wheat reserves only for 60 days in the state reserve,” Deputy Prime Minister Asen Vasilev told BNT public television. “We have the resources to do this (to buy wheat), instead of exporting it all and thinking in September where to buy it or at what prices,” Vasilev said.[8]

Against this background, India and Australia can replace the falling grain supplies to the world market, but experts fear that production in these countries may face some natural difficulties, not entirely solving food security issues in vulnerable countries.[9]

Under these conditions, the Head of the UN World Food Program, David Beasley, said that the Ukrainian crisis could dramatically increase food prices, which would hit the poorest countries in the world and put them at risk of starvation. According to him, before the conflict, the number of inhabitants of the Earth facing hunger increased from 80 to 276 million people due to the “perfect storm” in the face of coronavirus and climate change. He believes that the countries of the Middle East, which depend on grain imports from the Black Sea region, will suffer greatly: Lebanon imports 50% of grain from Ukraine, Yemen, Syria, and Tunisia also depend on supplies from Ukraine.[10]

However, the problems of hunger are not only food security but also a question of stability in various regions of the world. The American analytical resource Defense One notes that the food crisis over Ukraine leads to new military conflicts. Stopping the supply of bread and other foodstuffs for months and years ahead provokes violence in key regions to US security. The publication refers to the Global Food Security Program director at the Center for Strategic and International Studies, Caitlin Welsh, who predicts instability in Egypt, Iraq, Syria, and Iran, which are heavily dependent on Russian and Ukrainian exports. In this regard, Defense One concludes that the problems with food security in the world caused by the events in Ukraine sooner or later may enter the sphere of interests of the Pentagon. Moreover, the press secretary of the US military department, John Kirby, who confirmed the other day that this topic is very disturbing to the generals in Washington, illustrates this thesis as well as possible.[11]

Thus, the current situation in the world food market requires special attention from the world community.

At the same time, the West is only increasing its armed support for the Kyiv authorities, which leads to further prolongation of the crisis in Ukraine. The countries’ leaders declare their readiness to increase the pumping of weapons to Ukraine. Thus, Swedish Foreign Minister Anne Linde said that the country would additionally supply 5,000 units of anti-tank weapons to Ukraine.[12] Furthermore, a senior Pentagon official at a briefing said that the United States plans to begin deliveries to Ukraine this week as part of the largest package of military assistance for $ 800 million and believes that its implementation will take “many days.”. [13]

Meanwhile, further prolongation of the crisis, due to the increase in arms supplies instead of using the levers available to Western countries to transfer the conflict into a peaceful diplomatic channel, can lead not only to starvation of vulnerable groups of the population of the Middle East and North Africa but also to large-scale civil conflicts that threaten the stability of these regions and the world as a whole.

Source

[1] Что будет с зерном из-за событий на Украине, https://crimea.ria.ru/20220311/chto-budet-s-zernom-iz-za-sobytiy-na-ukraine-1122640549.html

[2] ADM shuts Ukraine grains terminal, crush plant, other facilities after Russia invasion, https://www.reuters.com/world/adm-shuts-ukraine-grains-terminal-crush-plant-other-facilities-after-russia-2022-02-24/

[3] Ukraine war threatens to make bread a luxury in the Middle East, https://news.trust.org/item/20220228153022-vytbd/

[4] Agriculture Giants Stay in Russia Despite Calls to Exit Over Ukraine War, https://www.wsj.com/articles/agriculture-giants-stay-in-russia-despite-calls-to-exit-over-ukraine-war-11647860581

[5] Opinion | Why the U.S. Needs to Act Fast to Prevent Russia from Weaponising Food Supply Chains

With help from China, Putin could use the war in Ukraine to upend the global economy, https://www.politico.com/news/magazine/2022/02/27/russia-weaponizing-food-supply-chains-00012130

[6] Egypt working to import wheat from regions other than Russia and Ukraine, https://www.reuters.com/article/egypt-commodities-wheat-idUSKBN2KV14G

[7] Bulgaria to bolster up its wheat reserves, producers fear export ban, https://www.reuters.com/article/ukraine-crisis-bulgaria-wheat-idAFL5N2V8080

[8] Hungary bans grain exports amid fears Russian invasion will trigger ‘significant’ shortages, https://www.telegraph.co.uk/world-news/2022/03/05/hungary-bans-grain-exports-amid-fears-russian-invasion-will/

[9] UPDATE 1-India’s wheat exports set to surge amid Black Sea supply uncertainty, https://www.reuters.com/article/ukraine-crisis-india-wheat-idAFL1N2V32LG

[10] World Food Programme head reveals worrying humanitarian bill of Ukraine as aid cut to poor, https://www.express.co.uk/news/world/1580981/world-food-programme-ukraine-middle-east-yemen-channel-4-russia-humanitarian-latest-vn

[11] Ukraine War Could Put Food Security on Pentagon’s Plate, https://www.defenseone.com/threats/2022/03/ukraine-war-could-put-food-security-pentagons-plate/363039/

[12] Швеция поставит новую партию противотанкового вооружения Украине, https://www.rbc.ru/politics/24/03/2022/623b97499a7947855d861ab0

[13] Пентагон поставит на Украину оружия еще на 800 млн долларов, https://eadaily.com/ru/news/2022/03/24/pentagon-postavit-na-ukrainu-oruzhiya-eshche-na-800-mln-dollarov


Disclaimer. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of SpecialEurasia. Assumptions made within the analysis are not reflective of the position of SpecialEurasia.

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