25 May 2022
Rome , Italy
Impact of Russia/Ukraine conflict and implications for Africa’s food security
FAO Chief Economist, Maximo Torero, speaks about the impact of the Russia/Ukraine conflict and its implications for food security in Africa. He also shares some policy recommendations for governments to consider so as to reduce the impact of the conflict and build the resilience of countries to future shocks.
Source : UN Office of the Special Adviser on Africa
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26 May 2022
The collateral of Russia vs Ukraine
Russia-Ukraine war has razed global agriculture system, once sold as the magic formula. It led to concentration of food production in a few countries, making others net importers, and has now fuelled a historic price rise.
The food market is intricately interconnected. “One of every five calories people eat has crossed at least one international border,” wrote Maximo Torero Cullen, chief economist of the United Nation’s Food and Agriculture Organization (FAO), in a blog on the FAO website.
The food market is also extremely fragile, with just six food baskets supplying the major chunk of the world’s staple food. It is also highly unequal in terms of production and supply — the poor countries are net importers and the high income countries net exporters, irrespective of their food production potential.
Worse, the advanced economies spend just 17 per cent of their earning on food while Sub-Saharan Africa forks out 40 per cent on the same, according to FAO data. As a result, even a slight disturbance in the system leads to a major food crisis in the poor countries, as is happening now.
The Black Sea region, which includes Russia, Ukraine and Kazakhstan, is one of the world’s six food baskets. Russia is the world’s largest wheat exporter while Ukraine is sixth on the list.
Together, the two warring countries produce 12 per cent of all food calories traded globally; control 29 per cent of global wheat exports, 19 per cent of maize exports, and 78 per cent of sunflower oil exports.
Russia is also the world’s top exporter of nitrogen fertilisers, the second-leading supplier of potassium fertilisers and the third-largest exporter of phosphorus fertilisers.
Some 50 countries depend on Russia-Ukraine for their food supply, particularly for wheat, maize and sunflower oils. The majority of these are poor and import-dependent countries in Asia and Africa.
Of the 53 countries or territories that faced food crisis last year, 36 depended on Ukrainian and Russian exports for more than 10 per cent of their total wheat imports, as per an analysis by Washington DC-based International Food Policy Research Institute (IFPRI).
In terms of food supply, in 2019 wheat and wheat products represented 408 kilocalories per capita per day in the countries facing food crisis.
In east Africa, where wheat and wheat products account for a third of the average cereal consumption, 90 per cent of the wheat imports come from Russia and Ukraine, the UN World Food Programme (WFP) noted.
Inputs for farming have been curtailed. Both in Russia and Ukraine, fuels have been diverted for military use. As per Ukraine’s Ministry of Agrarian Policy and Food, the country could plant 14 million hectares of spring wheat by the first week of May, which is 3 million hectares less than normal or a year before.
In February, both the countries had 16 million tonnes of maize and 13.5 million tonnes of wheat packed for export by the end of the month. That stock never moved out. Before the war, nearly all of Ukraine’s agricultural exports — about 5 million tonnes a month — were through the Black Sea, but Russia has blocked all the harbours.
On the other hand, international sanctions against Russia have made shipping impossible. For west Asia and Africa, importing from Ukraine and Russia is the best option because wheat is cheaper from these two countries and shipping through the Black Sea costs less.
Even for the countries importing now, the special war time insurance rates have dramatically increased and added to the costs.
Nicolas Denis, partner with McKinsey’s Chemicals and Agriculture Practices, in a podcast in April, estimated that “between 19 million and 34 million tonnes of export production could disappear this year”.
He foresees that even in 2023 there would be 10 million tonnes to 43 million tonnes of global wheat shortage due to the restricted supply from Russia-Ukraine. “To translate, that represents caloric intake for 60 million to 150 million people”, he said.
With this supply stream abruptly stopped, food and energy prices have leaped to historic levels. Wheat prices are forecast to increase by 40 per cent, reaching an all-time high this year.
In the immediate future, the overall global availability of foodgrains will be further reduced. The rise in prices of energy and fertilisers is likely to reduce yield, as per IFPRI’S report.
The fertiliser shortfall comes at the start of planting seasons in many countries, including India. The report said “food-crisis countries”, such as Honduras, Cameroon, Guatemala, Sierra Leone, Nigeria, Mozambique and Kenya, depend on Russian and Ukraine for 10-50 per cent of their fertiliser imports.
As countries substitute the commodities that are in short supply with others, the prices of the substitutes will go up.
Rice is being used to fill the gap in cereal imports, and its price has increased by 12 per cent globally since the beginning of the year.
As countries start sourcing food, fuel and fertilisers from countries other than Russia and Ukraine, it will add to the overall costs, ultimately adding to the cost of the produce.
This is also where the true character of a “globalised world” can come to fore: Countries have already resorted to hoarding staple foods that till recently they exported for profits.
Russia, for instance, has banned sales of fertiliser, sugar and grains. Indonesia, which produces more than half the world’s palm oil, has halted outgoing shipments.
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Food for all to free for all: The collateral of Russia vs Ukraine
