Between 2007 and 2008, Russia and Ukraine were among some 40 countries to introduce export restrictions to counter the effects of rapidly escalating world food prices. Although these actions did not cause the subsequent ‘food crisis’, they served to exacerbate an already extremely volatile situation that would spark social unrest and riots in dozens of countries and precipitate the ‘Arab Spring’ across North Africa and the Middle East.
The current disruption to the global food system caused by Russia’s invasion of Ukraine (the direct consequences of which are obviously far graver for the people of Ukraine) are reminiscent of the conditions leading up to the global food crisis of 2007-8. Perhaps worse. This crisis comes at a time in which world food prices have already spiked. The UN Food and Agricultural Organisation’s Food Price Index, which measures the monthly price changes of a basket of food commodities, reached an all-time high in February off the back of annual increases of some 14.8% for cereals, 15.3% for meat and 24.8% for dairy.
Russia and Ukraine in the global food system
To understand the impacts of the current crisis on food security, we first need to understand the role of Russia and Ukraine in the global food system: what they produce and export – and to whom. Taken together, Russia and Ukraine accounted for approximately 26% of total wheat exports and 30% of total barley exports in 2020-21. Ukraine is also a major source of corn, accounting for 14% of world exports in 2021-2. The bulk of Russia and Ukraine’s agricultural exports go to large and densely populated middle-income countries, including China, Egypt, Indonesia and Turkey. At the same time, some of the world’s most food-insecure countries, such as Yemen, also depend on agricultural exports from Russia.
In addition to cereals and pulses, Ukraine is a major source of safflower and sunflower oils and seeds. For 2020, it accounted for over 50% of total global exports (with Russia accounting for a further 30%) of sunflower oil. India is the main buyer of Russian and Ukrainian vegetable oils, alongside China, Iraq and the two agricultural powerhouses of the EU: the Netherlands and Spain. Industry sources are already reporting that sunflower oil will soon be unavailable, pushing up the prices for other vegetable oils and hence the cost of food further down the supply chain. This means that all countries, not just those which trade directly with Russia and Ukraine, will be affected.
The other significant food-related export from Russian and Ukrainian exports is fertilisers, including crucial agro-chemicals such as ammonia, ammonium nitrate, potassium and phosphorus. Russia is the world’s largest fertiliser exporter, supplying other major agricultural exporters like Brazil and USA. Brazil, in particular, is heavily dependent on Russian fertilisers and currently imports about three times as much as the next biggest importers: China and the USA. Agricultural systems in Africa are generally less dependent on fertilisers than other regions, but South Africa stands out as an exception. In this case, fertilisers have been estimated to be as high as 35% of the total input costs for grain farmers in South Africa. As with grains and pulses, supply shocks to the global fertilisers market come on top of already severe inflationary pressures. In the case of ammonia, for example, the year to December 2021 already witnessed an estimated 260% increase in annual prices.
At this stage, the upshot of all of this is difficult to predict with any certainty, but it seems very likely that farm bankruptcies, higher prices and food unavailability will be a common feature of 2022 and beyond.
The impact of sanctions
Moves are underway to suspend Russia’s ‘most-favoured nation’ (MFN) status in the WTO, empowering countries to raise import tariffs on Russian goods unilaterally without falling foul of international trade law. Some countries have already done this, including Canada, which has imposed an across-the-board tariff of 35% on Russian imports.
The suspension of Russian WTO privileges is likely to prove more symbolic than real in its effect, since the countries that trade most with Russia are unlikely to follow suit. More significant are the sanctions barring Russian banks from the SWIFT banking transfer system, rendering commercial transactions for trading purposes much more difficult to complete.
Of course, the most significant disruption to trade is caused by the conflict itself. Port operations for commercial purposes have been suspended by Ukraine since 24 February while Russian grain shipments through the Black Sea have been hit by extremely high insurance premiums for trading vessels. The combination of economic sanctions and the conflict are being felt on a daily basis in the form of currency volatility and inflation, making stable trade all but impossible in many cases.
The impact of the Russia and Ukraine conflict on global food security
The long-term impacts of the Russia and Ukraine conflict on global food security are, at this stage, difficult to gauge, given we do not know how long the war will last. Nor do we know what further steps, if any, the international community will take to counteract the multiple pressures building in the food system. But even before the conflict the situation was already grave. The UN estimates that, as of 2020, more than 2.3 billion people, or 30 percent of the global population, lacked year-round access to adequate food – a number that increased in one year more than it had done in the previous five combined. The UN also reports ‘a dramatic worsening of world hunger in 2020’ – much of it related to the fallout from COVID-19. While the pandemic’s impact has yet to be fully mapped, a multi-agency report estimates that around a tenth of the global population – up to 811 million people – were undernourished last year.
The countries that are most exposed to the impacts of the Ukraine crisis are those that depend directly on agricultural exports from the region. These include many of the densely populated and heavily urbanised countries of North Africa and the Middle East, where the price and availability of food has historically been a pivotal factor in social and political unrest.
But very few countries will be unaffected by the crisis. The impact of the Russia-Ukraine conflict on the global food system comes on top of a triple whammy of rising energy costs, supply chain constraints and Covid-related disruptions. Here in the UK, businesses have been warning for the last 12 months about the prospect of escalating food price inflation with consumers already expecting to face a £180 increase in their annual shopping bills – even before the full effects of the current crisis feed through.
With a rate of inflation currently at 6.2%, to rise to 7.4%, peaking at a whopping 8.7% in the final quarter of 2022, this will only add to the UK’s mounting cost-of-living crisis and increasing incidences of food poverty and insecurity, food bank dependence and diet-related health inequalities.