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Russia’s war of aggression on Ukraine has not only caused destruction, suffering and the largest refugee movement in Europe since World War II – it has also had a noticeable impact on global agricultural markets already. An overview, which countries are affected most severely by the destabilized grain markets, and what comes next.
Since early February 2022, two of the biggest grain and oilseed exporters have been at war: together, the two countries supply about 20 per cent of the world’s maize and 30 per cent of wheat exports. Combined exports for sunflower oil exceed 70 per cent. It’s majority, varying annually between 40 and 50 per cent, stems from Ukraine. Both countries have exported their agricultural products all over the world, including to Europe.
Large quantities of wheat from Ukraine and Russia are bought by densely populated countries such as Egypt, Turkey, Bangladesh or Indonesia. However, the dependence of many developing countries on grain supplies from Russia or Ukraine is particularly problematic: in some cases, they derive large amounts of their wheat imports from these countries and have very few alternative trading partners to whom they can quickly switch.
For some nations, wheat constitutes a staple food which they are unable to substitute on short notice.
Therefore, the supply setbacks affect many developing countries in the Middle East, such as Iraq, Lebanon and Yemen, as well as the Maghreb countries Egypt, Tunisia and Morocco. Among them are countries that already suffer from drought, conflict or famine. In Lebanon, for example, the country’s only grain silo burnt down in the Beirut port explosion in 2020. Therefore, the country is currently only able to store reserves for about one month.
Furthermore, some emerging economies’ processing sector depends on wheat imports from Ukraine and Russia. Turkey, for example, processes imported wheat from both countries and exports it as wheat flour and related products to Iraq, Syria or Yemen. However, one way or another, every wheat importer around the world is affected by the global supply shortage, even if not sourcing supplies from Russia or Ukraine directly.
Global grain markets have reacted to the threat of Ukrainian export deficits and the unreliability of potential Russian exports with massive wheat price hikes. On local markets, such sharp price increases lead, at worst, to a rapid food price inflation. Countries such as Egypt, Lebanon or Iraq are already reporting rising prices for flour and bread. For the local populations, this means people have to spend ever larger parts of their income on food. Particularly the less well-off have to switch to cheaper, possibly less nutritious products or reduce meals as a result.
Current estimates suggest that the war in Ukraine could increase the number of malnourished people worldwide by an additional 7 to 13 million people.
Depending on the conflict's duration, this number could rise up to 47 million more people in hunger and poverty, according to the World Food Programme. The majority of these people live in Asia, Africa and the Middle East.
Past rapid food price hikes have fuelled social unrest and political instability. So far, governments in affected countries try to remain calm and find strategies to resolve short- and intermediate-term bottlenecks. For example, alternative trading partners are being sought in North and South America, and food reserves are being released. Certain food items, such as flour and bread, are rationed, their prices fixed.
In this situation, it is important that exporting countries around the world keep their food and agricultural markets open and that export restrictions do not lead to further shortages coupled with rapid food price inflation. This is also what the agriculture ministers of Canada, France, Germany, Italy, Japan, the UK and the USA advocated for at their meeting in early March. Furthermore, the countries committed to even closer cooperation and specific action to protect global food security.
A contribution by sector project Agriculture (GIZ).
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