Russia’s war in Ukraine is delivering a shock to the global supply chain and cost of food, threatening global grain production, the supply of edible oils, and fertilizer exports.
The strong interconnection we have with countries around the world was first brought to light as the COVID-19 pandemic took hold globally. It was then that the importance of supply chains became an “in your face” reality as grocery stores and other businesses ended up with bare shelves.
And today, as more and more countries have relaxed their pandemic mandates in an attempt to get back to a semblance of normal, with the invasion of Ukraine, we are once again, reminded that the world is still closely connected.
Yet, this time, the people of the world are facing a food crisis, and it is likely to get worse as time goes on.
Vital food supplies are now at risk
Climate change and growing populations had already been adding to the challenges the global food production system faces – all before the pandemic started – and before a major conflict broke out.
On Wednesday, Indonesia tightened curbs on palm oil exports, adding to a growing list of key producing countries seeking to keep vital food supplies within their own borders, reports Reuters.
Palm oil is the world’s most widely used vegetable oil and is used in the manufacture of many products including biscuits, margarine, laundry detergents, and chocolate. Palm oil prices have risen by more than 50 percent this year.
Indonesia’s Trade Minister Muhammad Lufti has said the curbs in palm oil exports are to ensure that cooking oil prices at home remain affordable to consumers.
Russia and Ukraine are also important suppliers of edible oils as well as contributing nearly 30 percent of global wheat exports. Ukraine and Russia together account for about 75 percent of global exports of sunflower oil.
Ukraine’s government has banned exports of rye, barley, buckwheat, millet, sugar, salt, and meat until the end of this year, according to a cabinet resolution published on Wednesday.
World food prices rose to a record high in February to post a year-on-year increase of 20.7 percent, according to the United Nations food agency, while many markets have continued to climb this month.
“In the near term, food prices in world markets should be expected to rise further amidst all the uncertainty,” the Agricultural Market Information System said in a report. “This will add to global food insecurity.”
Products essential to food production in short supply
Yara International, which operates in more than 60 countries, buys considerable amounts of essential raw materials from Russia. Yara’s boss, Svein Tore Holsether, says a difficult supply problem looks to get even worse, according to The BBC.
“Things are changing by the hour. We were already in a difficult situation before the war… and now it’s an additional disruption to the supply chains and we’re getting close to the most important part of this season for the Northern hemisphere, where a lot of fertilizer needs to move on and that will quite likely be impacted.”
Russia produces enormous amounts of nutrients, like potash and phosphate – key ingredients in fertilizers, which enable plants and crops to grow. Canada produces 28.6 percent of the world’s potash, followed by Russia at 17 percent, and Belarus at 15.3 percent.
“Half the world’s population gets food as a result of fertilizers… and if that’s removed from the field for some crops, [the yield] will drop by 50 percent,” Mr. Holsether said.
“For me, it’s not whether we are moving into a global food crisis – it’s how large the crisis will be.” It should be noted that Europe gets about 24 percent of the key nutrients used in food production from Russia.
Just hours after Mr. Holsether spoke to the BBC, the Russian government urged its producers to halt fertilizer exports.
