Rising grain and fertilizer prices threaten to cause a global food crisis

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The Russian military invasion of Ukraine has significantly reduced the availability of wheat and barley, two of the most important cereals for food and farming, with a sharp rise in prices and increasingly concrete risks of a global food crisis for the poorer. Ukraine is one of the largest producers and exporters of wheat, while Russia produces a significant share of fertilizers, which at this stage cannot export due to the harsh economic sanctions imposed by the West.

The reduced availability of cereals and fertilizers reflected on global markets rather quickly. About a month after the invasion began, the price of barley increased by 33 per cent, that of grain of 21 percent and that of numerous types of fertilizers 40 percent off. The reduction in production, caused by the war, combined with the reduced availability of fertilizers, due to sanctions, could have a strong impact on a global level, especially worsening the living conditions of the poorest and who were starving even before the conflict.

Over the past five years, Ukraine and Russia alone have handled 30 percent of world grain exports, 32 percent of barley exports and 75 percent of sunflower seed exports. The oil derived from the latter is in many countries the basis for most of the food produced industrially or in the home.

While Russia is unable to export due to economic sanctions, Ukraine is unable to bring much of its products abroad due to the Russian blockade of its main Black Sea ports. The war has also made more difficult the transport of food raw materials through the railways, making even exports by land to countries bordering Ukraine to the west complicated.

The concerns are not only related to the possibility of exporting, but also to that of harvesting.

In Ukraine it is increasingly difficult to find fuel, which is essential to operate agricultural machinery for maintaining fields and harvesting. Much of the fuel was destined for the military vehicles of the Ukrainian army. For this reason there have been several in the past few weeks appeals by the government of Ukraine to other European countries, asking for supplies of fuel to be used in agriculture in areas of the country not yet directly affected by the Russian military invasion.

However, as Russia’s offensive progresses, there is a risk that up to a third of the cultivated areas in Ukraine will become a war zone, making it impossible to grow cereals and other raw materials. Among the millions of displaced people seeking safer places and protection, both within the country and in neighboring states, there are also numerous farmers, who will therefore not be able to work on the next harvests.

Fewer grain exports from Ukraine are pushing buyers to turn to other countries, which have to contend with much higher than normal demand and cannot be fully satisfied. To these difficulties are added those related to atmospheric events, which always condition the availability and production capacity of some countries.

Last year a protracted period of floods in part of China meant that production in the country of grain will be insufficient this year, as a result, China will have to buy more wheat from abroad. The Chinese government has explained that there is no alternative, after estimating that floods have rendered about one third of the country’s wheat fields unusable when planted.

Fewer fertilizer availability will have further repercussions on global production. In recent months, many European producers had reduced their activities due to the high price of energy, the consumption of which is very high in the fertilizer production processes. In Russia, production had not undergone particular downturns thanks to the greater availability of oil and gas for the production of electricity, but with the new sanctions the production rates have been revised due to fewer export opportunities and a next block imposed by the Russian government itself. The price of fertilizers has gradually increased, prompting farmers to reduce their use and expose themselves to greater risks of a lower yield of their fields.

The sanctions also had repercussions on Belarus, another important producer of certain types of fertilizers, especially for corn and soybeans. The latter is widely used for animal breeding, especially in China: an increase will lead to higher costs for farmers and consequently rising prices of meat on the markets.

The United Nations World Food Program (WFP), which deals with food assistance, has valued that the military invasion of Ukraine will lead to up to 13 million more people to suffer from hunger, worsening a situation already made very difficult by the effects of the coronavirus pandemic. Before 2020, the problem affected approximately 720 million people around the world, now it is estimated that it affects at least 811 million individuals.

WFP executive director David M. Beasley said the invasion of Ukraine: ‘It just put a catastrophe on top of another catastrophe. There is no precedent comparable to this since the Second World War. ” The Program feeds approximately 125 million people every day and has faced an increase in costs of approximately $ 70 million per month in recent months. These conditions require a cut in food supplies for nearly 4 million people and a review of priorities.