Why the war in Ukraine will hurt poor nations importing grain: Explained

Poorer countries in northern Africa, Asia and the Middle East that depend heavily on wheat imports risk suffering significant food insecurity because of Russia’s war in Ukraine, and the conflict is poised to drive up already soaring food prices in much of the world, the U.N. food agency warned Friday.

Ukraine and Russia, which is under heavy economic sanctions for invading its neighbour two weeks ago, account for one-third of global grain exports.

With the conflict’s intensity and duration uncertain, “the likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally when international food and input prices are already high and vulnerable,” said Qu Dongyu, director-general of the Rome-based Food and Agriculture Organization.

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The U.N. agency, known as FAO, also noted that Russia is the lead producer of fertilizer, and a key fertilizer component — urea — has jumped more than threefold in price in the last 12 months.

There’s also the uncertainty over whether Ukraine’s wheat ready in June can be harvested as “massive population displacement has reduced the number of agricultural laborers and workers. Accessing agricultural fields would be difficult,” Qu noted.

Ukraine’s ports on the Black Sea are shuttered, and its government this week banned the export of wheat, oats, millet, buckwheat and some other food products to prevent a crisis in its own country.

The ban does not apply to its major global exports of corn and sunflower oil. It and Russia together supply 52% of the world’s sunflower oil exports. They also account for 19% of the world’s barley supply, 14% of wheat and 4% of corn.

“It is still unclear whether (other) exporters would be able to fill this gap,” Qu said, warning that wheat inventories are already running low in Canada.

The United States, Argentina and other wheat-producing nations are likely to limit exports as governments seek to ensure domestic supply, he said.

Adding to the pressure, countries that depend on Russian and Ukrainian wheat are likely to increase imports. Egypt, Turkey, Bangladesh and Iran buy 60% of their wheat from Russia and Ukraine. Also heavily reliant are Lebanon, Tunisia, Yemen, Libya and Pakistan.

In Libya, where civil war has ground on for years, the latest price increases for food staples have people worried.

Salah Alabar, a 37-year-old father of two, said bread and flour have increased by roughly 40% in his Benghazi neighbourhood. Sunflower oil is 25% higher.

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“This poses a challenge to families with minimum wages and even the middle-class families as expenses increase across the board,” he said.

The U.N. agency said its simulations suggest that “the global number of undernourished people could increase by 8 to 13 million” in 2022-2023, particularly in Asia, sub-Saharan Africa, the Middle East and North Africa.

Potential for unrest could rise with the prices.

Mohammed Jassim, who owns a small bakery in Baghdad, said there was real concern in Iraq, where dozens of people held demonstrations in the past week over skyrocketing food prices.

“I am a consumer who buys staples for my business, and I have seen an increase of about 20% in the price of sugar and wheat,” he said. “If this keeps up, then I will be forced to raise my prices, and ultimately, the average citizen will be the one to pay for it.”

With shortfalls in grain and sunflower seed exports by Ukraine and Russia, “worryingly, the resulting global supply gap could push up international food and feed prices by 8 to 22% above their already elevated levels,” the FAO’s report warned.

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Its figures show food prices reached an all-time high in February.

The COVID-19 pandemic already had a major impact on global food security. Last year, global prices of wheat and barley rose 31%, and rapeseed and sunflower oil prices jumped by more than 60%. Wheat prices have surged more than 50% since a week before the invasion.

In Italy, supermarkets in Tuscany and Sardinia are limiting sales of sunflower seed oil to two containers per customer, Italian state TV said. Spanish supermarkets also are rationing it.

Italian importers of the seed for processing into oil say their supply has already dried up.