This is the third in a series from the frontlines of Russia’s war against Ukraine by Vitalii Dankevych, an Economics Professor at Polissia National University. Read parts one, two, four, and five.
His bravery and commitment to writing about these issues literally while under siege and volunteering in his community is inspiring. I stand with him and I stand with all of the people of Ukraine. —Danielle Nierenberg
Ukraine will be able to feed itself—we have food stocks for more than one year. And we were able to sow some crops. According to Ukrinform, if the military situation does not worsen significantly, Ukraine will be able to harvest the main crops at 70 percent of the annual average. There is currently no shortage of basic food items.
In addition, the largest investors have not left the Ukraine agricultural sector. According to Forbes, the shares of the largest Ukrainian agricultural holdings did not decline significantly, despite the war. The capitalization of the largest agricultural companies as of March 28 was as follows: Kernel (510 thousand hectares) US$623 million, MHP (370 thousand hectares) US$365 million, Astarta (220 thousand hectares) US$135 million. Ultimately, what will be important to them is whether Ukrainian companies will be able to resume operations and exports in military conditions.
At the same time, the question arises whether Ukraine will be able to export products and provide food to more than 400 million people around the world. According to the Ministry of Economy, because of the war waged by Russia in Ukraine, exports of Ukrainian goods in March fell by half. And imports dropped more than three times. Russia is deliberately undermining our country’s economy by blocking domestic exports. According to Ukrinform, the Russian Navy is currently blocking more than 90 civilian ships in the Black Sea region that transport grain and other food. At the same time, about 30 percent of world wheat exports come through the Black Sea region, as well as 20 percent of corn and 75 percent of sunflower oil. In addition, the Russian invaders are attacking agricultural infrastructure to try to prevent us from rebuilding our capabilities in the future.
Currently, Ukraine has three ways to export: the Danube ports, railways, and highways. Danube ports account for about 30 percent of exports and rail, about 70 percent. Currently, up to 30,000 tons of domestic grain products are shipped by rail daily. But for the railway, there is a lack of cars and locomotives. The press service of the Government of Ukraine notes that the European Commission intends to create special trade routes between Poland and Ukraine, which will help facilitate the transportation of agricultural products.
A much worse food situation is expected in the Middle East and North Africa, which are the main importers of food from Ukraine. Rising world food prices as a result of the war in Ukraine could lead to famine and riots in poor countries. There is a danger of a repeat of the food riots that took place in the previous period of soaring prices in the late 2000s.
According to the U.N. Food and Agriculture Organization (FAO), world food and feed prices could rise by 8-20 percent as a result of Russia’s war against Ukraine. According to Bloomberg, wheat futures will average US$11 or more per bushel by the end of the year, and corn futures will be about US$7.75 per bushel or higher. This is 30 percent more than at the end of 2021.
Countries that are well-off and have never had food problems will face higher prices. Since the beginning of the war, wheat, which was not cheap at US$300 a tonne, has risen by 50 percent to US$450 a tonne. And these are only the first results and the reaction of the market to the cessation of supplies from Ukraine. It’s likely that in the fall, we will see even higher prices in the world. The consequences of the war in Ukraine will be felt by almost every consumer across the globe.
World food prices rose 13 percent in March 2022. This is the biggest leap in 60 years. Vegetable oils rose 23 percent; cereals, 17 percent; sugar, 7 percent; and meat 5 percent.
According to the annual Global Hunger Index, before the war with Ukraine, 47 countries, mostly in Africa and Asia, suffered severely from malnutrition and hunger. In the absence of food supplies from Ukraine, this list could grow to 60. In addition, international sanctions could disrupt Russian exports. The FAO says that 50 countries, including many of the least developed countries, depend on Russia and Ukraine for 30 percent or more of wheat supplies. The number of malnourished people in the world may increase by 8-13 million in 2022-2023.
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Photo courtesy of Kyryl Levenets, Unsplash