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At the beginning of the twentieth century, Ukraine was nicknamed “the granary of Europe”, because many cereals were grown on its great plains. Even today the country is one of the largest exporters of wheat in the world, at least according to the latest available data: the fifth, after Russia, the United States, Canada and France. And together Russia and Ukraine are responsible for nearly a third of total grain exports. This is why the Russian invasion of Ukraine, which immediately blocked the ports on the Black Sea, has already raised the price of wheat and is likely to cause major problems for countries that rely more on imports from Eastern Europe. They are mostly countries in North Africa and the Middle East, where the hot and dry climate does not favor the cultivation of cereals.
According to the International Trade Center dataa joint agency of the World Trade Organization (WTO) and the United Nations, in 2020 Egypt was the country that spent the most on importing wheat and the third largest by quantity of imported wheat, after Indonesia and Turkey: 60 per cent bought it from Russia, 26 per cent from Ukraine, only the remaining 9 per cent from other countries.
The Egyptian Ministry of Supply and Internal Trade said the current grain stocks are sufficient for at least four months of consumption and is trying to make arrangements to buy it elsewhere. In the meantime, as reported to Bloomberg from a member of the Egyptian Chamber of Commerce, the price of unsubsidized bread in Cairo has increased by 50 percent since last week. of the population).
The increase in the price of wheat due to the war could also greatly damage Lebanon, a country which has been experiencing a very serious economic crisis for more than two years and which, in relation to the number of inhabitants, imports more or less wheat as much as Egypt. In 2020, 81 percent of its wheat imports came from Ukraine, 15 percent from Russia. Lebanon’s current grain reserves can last for a month and a half, he told AFP Ahmad Hoteit, representative of Lebanese wheat importers: the country’s ability to accumulate wheat was compromised by the big explosion at the port of Beirut in 2020.
Other countries that import wheat mainly from Ukraine – and secondarily from Russia – are Libya and Somalia. The World Food Program, the United Nations humanitarian organization that provides food resources to hungry areas of the world, also bought 70 percent of its 2021 grain reserves from Ukraine and Russia: in the future it could find it difficult to help populations in need of food.
In 2020 Ukraine was the first wheat exporter country also for Indonesia, whose dependence on Eastern European cereals is however more reduced, given that the country imports comparable quantities of wheat also from Argentina, Canada, the United States and Australia.
Generally, so far Russian and Ukrainian wheat has been preferred by those countries that, due to their geographical proximity, spent less on importing it from Eastern Europe than from America: they will be the most damaged by the war, especially to the extent that they will struggle to buy wheat. at higher prices from more distant exporters.
A notable case is Turkey, after Indonesia second country in the world for tons of wheat imported in 2020: 67 per cent from Russia, 11 per cent from Ukraine. Ismail Kemaloglu, former head of the Turkish state company that deals with the purchase of cereals, told al Financial Times: «The war will increase the cost of food even more. The most critical aspect for Turkey is that the Black Sea offered a logistical and economic advantage. Prices will go up a lot when we buy from the United States or Australia ”.
Kemaloglu spoke of a further increase because even before Russia invaded Ukraine, wheat prices had risen around the world due to the economic crisis due to the coronavirus pandemic and poor harvests in Canada, the United States and Argentina. Then on February 24, the day the invasion began, the value of the futures Americans on wheat has reached and passed the highest in the last ten years, dating back to the summer of 2012 (i futures they are contracts that are purchased on the stock exchange and commit those who stipulate them to buy an asset at a predetermined price on an agreed date, essentially betting).
Since the beginning of the year, this value has increased by more than 40 per cent and surpassed those reached between 2007 and 2008, years in which the production of cereals decreased significantly in Russia, Australia and other exporting countries: the consequent the rise in the price of wheat sparked major protests in about forty countries, from Haiti to the Ivory Coast. Also between 2009 and 2010 there was an increase in the price of wheat, which is believed to have influenced the events of the so-called Arab springs.
However, it is difficult to predict the impact of the war in Ukraine on grain supplies and food resources more generally.
Wheat is grown in many different parts of the world and the absence of Ukrainian (and possibly Russian) from the market is not entirely irremediable. Much, however, depends on how long the war will last: for the moment the conflict has simply blocked shipments of cereal supplies, but it could also prevent Ukrainian farmers from proceeding with sowing this spring, reducing world production. In Russia there should be fewer problems from this point of view, but the economic sanctions imposed by the international community on the country could in turn have a strong impact. The significant increase in the value of futures it is likely influenced by the prediction that the crisis in Ukraine will not be resolved anytime soon.
For Italy the impact of the war on the wheat market will not be comparable to that of other countries, even if for some producers it could be felt. According to an analysis by Confagricoltura reported by Corriere della Sera, in the first ten months of 2021 Italy imported 122 thousand tons of soft wheat (the one with which bread is made) from Ukraine and 72 thousand from Russia: quantities that put together are about 5 percent of the total. As for durum wheat (the one with which pasta is made), it was not imported from Ukraine, but from Russia: 51 thousand tons, equal to 2.5 per cent of the total.
The vice president of Confagricoltura Matteo Lasagna has explained that for Italian food production and agriculture the increase in the price of gas (which among other things is used a lot to be able to produce fertilizers) and that of corn, another cereal of which Ukraine will be much more relevant it is a large producer and with which it feeds its livestock: in the first ten months of 2021, Italy imported 40 per cent of the corn it uses, 11 per cent of which came from Ukraine.