Insight Focus
- Many countries around the world rely on Russia and Ukraine for their grains and fertiliser.
- So, this week, we discuss what this might mean for food security.
- If you’d like us to answer one of your questions in an upcoming edition, please email will@czapp.com.
What Does the Ukraine Crisis Mean for Food Security?
We already think Russia and Ukraine’s grain flows will be disrupted into the second half of this year, but the severity of this will depend on what happens next with the war.
Countries across the Middle East, South Asia, and North Africa suffer from food insecurity as it is, relying heavily on Russia and Ukraine’s grains.
Egypt and Turkey, for instance, depend on Russia and Ukraine for 70% of their wheat, and 95% of Ukraine’s wheat went to Asia, the Middle East, and North Africa (MENA) in 2020.
However, Russia’s already facing financial sanctions from the US, the European Union, and the UK, so if these (and any future sanctions) impact food production, food prices and insecurity could worsen. Food prices were already at a 10-year high pre-conflict…
Elsewhere, logistics costs are being driven higher by surging oil prices, and many local currencies have fallen against the US Dollar, with latter seen as a safe-haven currency in times of crisis.
Source: Refinitiv Eikon
This means the inflationary effect felt by consumers in Asia and MENA should intensify, as they earn money and buy food in local currency, rather than USD.
The importance of Russia and Ukraine doesn’t stop at grains, though. Russia is also the world’s largest fertiliser exporter.
Fertiliser prices were already high before the war, so further disruption here could hinder crop development and subsequent food supply, both of which would impact prices.
Other Insights That May Be of Interest…
Russia & Ukraine Grain Flows Likely to Be Disrupted into H2’22
What the Ukraine Crisis Means for PET
