Thursday, Feb 24, 2022 marks the day when Russia shocked the entire world by invading Ukraine. Most Canadian and American citizens felt the impact of the war through rising gas prices as they soared to a high of $2.50. Although months have gone by and gas prices are starting to go back down, the worst has yet to come. For the majority who don’t know, Ukraine is one of the main world exporters for grain and vegetable oils. In 2021 Ukraine was the second largest supplier of grains for the European Union (EU) and a large food supplier for low and middle-income countries in Asia and Africa. The longer the Russia-Ukraine conflict lasts, the more insecurity about food supplies it may bring not only to Ukraine and the region, but also to the whole world.
When it comes to cereals like wheat, corn, rich and barley, the leaders of the industry talk about millions of metric tons. For 2021, GTAS Forecasting from S&P Global Market Intelligence estimates the exports for Ukrainian corn for 27.2 million metric tons and the export of wheat 21.2 million metric tons. These two alone stand for 12.8% and 10.5% of the total world exports. Unfortunately, Ukraine is expected to harvest less than half of that this year. A short fall of 40 million metric tons is enough that a country like the UK could only catch up by having everyone not eat for 3 years! A couple million metric tons of grain not being harvested can cause a worldly problem.
Ukraine is also a large food supplier for low and middle income countries, such as Africa and Asia. In 2021, 55.1% of Ukraine wheat was exported to Asia and 40.7% to Africa.One of the main problems is that Ukraine was unable to plant crops this season due to the Russian invasion. July harvest comes from March and February planting. Almost none of that wheat was intended to be exported to places like Europe and North America, though its predicted shortfalls to other continents have already started to be noticed due to the rising prices of wheat across the world. People in Europe and around the world are now competing with Africa and Asia to find a steady wheat supply. As seen in the link below, Ukraine has 562 grocery stores but no grain farms or silos anymore. https://www.zeemaps.com/view?group=4410859&x=-89.849631&y=44.059004&z=14https://www.zeemaps.com/view?group=4410859&x=-89.849631&y=44.059004&z=14
Head of Ukraine's Maritime Administration confirmed on February 28 that Ukrainian ports will remain closed until Russia's invasion ends, adding that the port of Mariupol has sustained damage from Russian shelling. Furthermore, multiple shipping companies have suspended sailings to endangered Black Sea ports. Additionally, at least three commercial ships have been hit by bombs since February 24. For a number of countries in South Asia, Western Asia and Africa cutting off the major source of supply for wheat, corn and vegetables oils will definitely raise food insecurity and may even lead to an increase in global hunger.
During the latest USDA Agricultural Outlook Forum, U.S. Trade Representative Katherine Tai described the Russia-Ukraine conflict as the next potential shock to global trade and supply chains. She underlined the position of Ukraine on the global agricultural market and said that we may see the economic impacts of the situation coming soon. It is still too early to assess the long-term consequences of the conflict, but a number of agencies will work on assessing the impact on agriculture trade as well as the whole global economy.