The Russo-Ukrainian war and its consequences on global food security

  Focus - Allegati
  01 giugno 2023
  16 minuti, 6 secondi

Abstract: Russia's full-scale invasion of Ukraine has had a negative impact on the country's ability to produce and export grain. This has had significant implications on the Ukraine's economy as well as on global food security. Known as the breadbasket of Europe, Ukraine is a major exporter of grain. Consequently, the shortage of grain supplies caused by the war has led to an increase in international food prices, which proved to be particularly problematic in the developing world. Political leaders in the West accuse Russia of intentionally destroying Ukraine's agricultural sector to "punish" the country. At the same time, they are convinced that the Kremlin is using "food supplies" as a weapon against the West to obtain a relief in sanctions.

Authored by Jovan Knezevic - Senior Researcher GEO Difesa e Sicurezza

Introduction

Russia has agreed to extend the Black Sea Grain Initiative (BSGI) for another 60 days. The UN/Turkey brokered agreement between Russia and Ukraine enabled the shipment of 30,000 tons of grain stuck in Ukrainian ports of the Black Sea because of Moscow’s blockade (Hayatsever, Nichols, 2023). The initiative helped to partially mitigate the effects of Russia’s full-scale invasion of Ukraine on global food security. Known as the “breadbasket of Europe”, Ukraine is a major exporter of grain (barley, maize, wheat and sunflower oil). However, since the beginning of the conflict, producing and exporting grain has become difficult, if not impossible. This has had remarkable consequences on both Ukraine’s economy and on global food security. Indeed, many states in the developing world, which are highly dependent on Ukraine’s grain supplies, had to cope with rising food prices which undermined their households’ ability to buy food, exacerbating the global food crisis. Politicians in the West accuse Russia of “weaponizing food” against Ukraine in an attempt to punish the country by destabilizing one of its most important sectors from an economic point of view. According to them, the Kremlin is also threatening to provoke a global famine in order to obtain a relief in sanctions by the US and its allies.

How the war impacted Ukraine’s agricultural sector

The war in Ukraine has significantly affected the country’s capacity to produce and export grain. Since the beginning of the invasion, thousands of hectares of lands that were previously used to grow crops were destroyed along with farm equipment, food deposits and energy facilities. With its 5,700 thousand hectares of land that would usually grow wheat, barley, corn and sunflowers, the Veres Farm is a striking example. Because of its strategic location, its lands became a battlefield preventing farmers from planting, growing and harvesting crops. The agricultural equipment, grain silos and energy facility were also hit several times (Becatoros, 2022). According to some estimates, 84.200 pieces of agricultural machinery and 9.4 million tons of agricultural products have been damaged or destroyed since the war has started (Welsh, 2023). The World Bank estimated that Ukraine’s agricultural sector suffered damages worth 8.7 million dollars (NHK World Japan, 2023). Access to agricultural lands has also been hampered by the presence of landmines. According to FAO, 12% of agricultural businesses in Ukraine reported that their lands were contaminated with mines with the Kherson province being the most heavily mined (Kullab, 2023). Indeed, because of the damage caused to agricultural lands, the protraction of the conflict which made farming more risky and the presence of landmines in fields, Ukrainians sowed 22% less compared to 2021, with the area not having been sown amounting to 2.8 million hectares (Consilium Europa, 2023).

Some experts and analysts believe that attacks against farms and agricultural equipment are not “collateral damage” as the Kremlin claims. Instead, they are, in their view, part of a systematic and intentional campaign by Moscow. In March 2022, Russian forces’ destruction of one of Europe’s largest food storage facilities where 50,000 tonnes of food were stored seemed to confirm this hypothesis. Satellite imagery showed that the warehouse suffered significant damage while surrounding areas were intact, which suggests that the food storage facility was targeted intentionally (Welsh, Bermudez, Jun, Dodd, 2022). Apart from targeting lands, agricultural equipment and deposits, Russian forces have reportedly stolen around 4 million tons of Ukrainian grain (Welsh, 2023), which was later sold as Russian. Most importantly, Russia has blockaded Ukrainian ports in the Black Sea preventing the country from exporting its grain. 90% of the grain is exported through ports in the Azov and Black Seas while other channels - rivers, rails and roads - do not have the capacity to export the same quantities as maritime ports (OECD, 2022). Consequently, the intentional blockading of Ukrainian ports, and the bombing thereof, has had devastating consequences on Ukraine’s as well as on global food security. By withholding grain exports, Russia also affected Ukraine’s capacity to store grain as the country was running out of room to store the grain that was harvested.

There are also other, indirect mechanisms through which the war has affected global food security. For example, the destruction of bridges by both Ukrainian and Russian forces to disrupt the enemy’s supply lines and slow down its advance, has prevented the transport of agricultural commodities across the country and towards port cities (Welsh, 2022). Similarly, systematic and intentional attacks by Russian forces on railways and power stations have kept trains from running and transporting agricultural products (Welsh, 2022).

Consequences of the war on global food security

Based on a widely accepted definition, “food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life” (FAO, 2006). Four dimensions of food security can be identified in this definition: availability, accessibility, utilization, and stability. The war in Ukraine has affected most of them. The first dimension of food security, food availability, can be defined as “the availability of sufficient quantities of food of appropriate quality, supplied through domestic production or imports (including food aid) (FAO, 2006). The destruction of lands, agricultural equipment, grain storage facilities as well as the presence of landmines in fields, affected the availability of key agricultural commodities. Considering that Ukraine is a major exporter of wheat (10% share of global exports in 2021), maize (15%), barley (13%) and sunflower oil (31%) (Caprile, 2022), the war, by affecting Ukraine’s capacity to produce and export gain, has exacerbated the already existing global food crisis stemming from the effects of climate change and Covid-19. The situation is even more alarming if we consider that some of the states which are highly dependent on Ukraine’s grain exports are also among the world’s least developed (Somalia, Laos, Sudan, the Democratic Republic of Congo, Tanzania) (World Economic Forum, 2022) or among the world’s most populous.

The war in Ukraine has also had a negative impact on another dimension of food security: accessibility. Access to food can be defined in physical or economic terms. From a physical point of view, food is available but inaccessible when some physical constraints such as distance, adverse weather conditions or, as in the case of the war in Ukraine, blockades of ports prevent people from enjoying it. From an economic perspective, on the other hand, food may become inaccessible when the purchasing power of households is reduced. In the case of Ukraine, the destruction of entire agricultural fields, storage and production facilities as well as the withholding of grain heavily affected Ukraine’s agricultural sector, one of the most sizable sectors of the country’s economy. In 2021, around 14% of the country’s population was employed in this sector, contributing to 11% of its GDP and 42% of its exports (Matvieiev, 2022). By destabilizing this sector, the Russo-Ukrainian war has had negative effects on Ukraine’s economy, reducing households’ incomes and their economic access to food. At the global level, on the other hand, economic access to food has been affected by the shortage of grain supplies which, in turn, led to higher food commodity prices. Already in March 2022, the FAO Food Price Index reached an historical record high with a 33.6% increase compared to the previous year (FAO, 2022). Higher food prices were also fuelled by the increase in the price of fertilizers (a key input for agriculture) as well as higher energy costs. Higher food and energy prices, combined with other factors, led to high inflation rates whose effects were more severe in less developed/developing regions such as Sub-Saharan Africa where households spend a greater percentage of their total expenditure on food. According to the World Bank, households in Sub-Saharan Africa devote up to 75% of their income on food, compared to 10% in the UK. Consequently, rising food prices significantly reduced real incomes of these households, affecting their economic access to food (Emediegwu, 2022).

The “geo-politicization” of grain supplies? Possible explanations

There may be several drivers behind Russia’s use of food supplies as a “weapon”. According to some, by deliberately targeting agricultural lands, equipment, deposits and withholding grain, Russia is purposefully trying to undermine Ukraine's agricultural sector (Wengle, Dankevych, 2022), the most sizable sector in the country’s economy. It is worth recalling that, in 2021, around 14% of the country’s population was employed in this sector, contributing to 11% of its GDP and 42% of its exports. Consequently, by destabilizing Ukraine’s agricultural sector, Russia is also harming the country’s economy. Also, affecting the country’s agricultural potential, “gives Russia more leverage over its grain trade partners in Asia and Africa” (Wengle, Dankevych, 2022). Indeed, together with Ukraine, Russia is one of the world's major exporters of wheat (24% of global share in 2021), barley (14%) and sunflower oil (24%) (Caprile, 2022). By preventing Ukraine from producing and exporting its grain, Russia may thus increase its share of exports in the world market for grain at the expenses of Ukraine. From a more political perspective, according to the Secretary of State of the US, Antony Blinken, as well as other leaders in the West, Russia is “blackmailing the world by holding food supplies hostage as part of its war strategy to end sanctions” (NBC, 2023). As already discussed, through the blockading ports in the Black Sea and the voluntary restriction of its own exports of key agricultural commodities and fertilizers, the Kremlin is able to influence prices and cause a global food crisis, especially in the less developed/developing countries. This explains, in Blinken’s perspective, why Moscow has indicated that it would lift the blockade on Ukrainian ports in the Black Sea provided that the US and the EU lifted their sanctions. Leaders in Russia, for their part, denied blackmailing the world with food supplies, arguing instead that the global food crisis was a consequence of Western-imposed sanctions against the Russian economy. Finally, the weaponization of food supplies by Russia may fall within Russia's “psychological warfare” against Ukraine, aimed at breaking Ukrainians’ will to resist.

Responding to the food crisis: the Black Sea Grain Initiative

In July 2022, the United Nations and Turkey helped to broker the Black Sea Grain Initiative (BSGI), an agreement between Ukraine and Russia “to allow the safe export of grain, fertilizers and other food products from Ukrainian ports in the Black Sea” (UNCTAD, 2023). Since that moment, 1080 ships full of grain were enabled to leave the three ports of Ukraine (Chornomorks, Odesa and Yuzhny Pivdennyi), exporting over 30 million tons of grain, as of May 2023. In terms of shares of commodities exported through the BSGI, maize was the most exported (50%), followed by wheat (28%), sunflower products (11%), and others (11%). 64% of the wheat went to developing countries (Ethiopia, Yemen, Afghanistan, Sudan, Somalia, Kenya and Djibouti). Maize, on the contrary, is exported equally to developed and less developed/developing countries (Consilium Europa, 2023). By enabling the free passage of grain, the BSGI has partially mitigated the adverse effects of the war in Ukraine on global food security. Other bilateral and multilateral efforts such as the memorandum of understanding between the UN and the Russian Federation and EU solidarity lanes played a role as well. Indeed, looking at data from FAO, there has been a fall in FAO’s Price Index from 154 in April 2022 to 127 in April 2023 (FAO, 2023).

However, in spite of these efforts, there is more to be done. In terms of ship departures, we are still far from pre-war levels with only around 40% of ships departing from ports, compared to the 90% before the war. With the signing of the initiative, the share increased from 20 to 40%, but more is needed. In terms of prices-levels, despite an overall decrease in FAO’s price index since April 2022, they remain high. In January 2023, they were 45% above the average over the past two decades (UNCTAD, 2023). This is particularly the case in developing countries which, unlike developed ones, did not entirely benefit from declining prices due to the exchange rate. Indeed, while the US dollar appreciated in 2022, currencies of developing countries depreciated. As a result, the cost of imports increased (UCTAD, 2023). Also, contrary to food prices, fertilizers and fuel costs have been rising thus eroding “any gains from any fall in international food prices” (Emediegwu, 2023).

Finally, another problematic aspect related to the initiative is the unpredictability of Russia’s actions vis à vis the agreement. The Kremlin has threatened to abandon the BSGI on several occasions unless the US and the EU softened their sanctions against Russia. Indeed, whereas the country’s exports of food and fertilizers were not targeted by sanctions, Moscow claims that restrictions on payment, logistics and insurance became a barrier to its exports. These claims were dismissed by leaders in the West who said that the country has exported a higher level of grain and fertilizers than before the launching of the “special operation” (Al Jazeera, 2023). Whether this is true or not, Moscow’s repeated threats to abandon the agreement contribute to fuel a climate of uncertainty around the UN/Turkey-brokered initiative, with significant implications on global food security.

Conclusions

Russia’s full scale invasion has significantly affected the already fragile global food security. The erosion of soil, presence of mines in lands along with the destruction of agricultural equipment and infrastructure has negatively impacted on the country’s capacity to produce grain. At the same time, the blockade of ports in the Black Sea by Russia has prevented Ukraine from exporting its grain. This has had huge economic repercussions because of the relevance of the agricultural sector in the country’s economy. Most importantly, it has had negative effects on global food security because Ukraine is a major exporter of key agricultural commodities including maize, wheat, barley and sunflower oil. Indeed, in light of the shortage of grain supplies due to the war in Ukraine, food prices reached historical high with severe implications in developing countries. The latter depend significantly on Ukraine’s grain exports and are also more vulnerable to higher food prices because households tend to spend a higher portion of their income on food.

The UN/Turkey-brokered Black Sea Grain Initiative, while enabling the shipment of over 30 million tons of grain from the Ukrainian ports, is not enough. Indeed, in spite of this and other initiatives, food prices in developing countries remain high. This is due both to the exchange rate and to the persistence of high prices of fertilizers and energy which erode any gain from the fall in the price of food. Therefore, unless something is done to cut the cost of inputs (fertilizers, energy), food prices in the developing world will remain high, offsetting any fall in the price level caused by the BSGI. Also, the BSGI “has helped to boost food security through exports but not through production” (Emediegwu, 2023). As long as production of grain in Ukraine is hampered by active fighting on lands, attacks against agricultural equipment and facilities, food security will be threatened. In other words, if production keeps falling, exports will fall at a certain point, and global food security will be jeopardized.


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