War in Ukraine to hurt poor nations importing grain, says UN food agency

Poorer countries in northern Africa, Asia and the Middle East that depend heavily on wheat imports risk suffering significant food insecurity because of Russia's war in Ukraine, and the conflict is poised to drive up already soaring food prices in much of the world, the UN food agency warned on Friday.

Ukraine and Russia, which is under heavy economic sanctions for invading its neighbour two weeks ago, account for one-third of global grain exports.

With the conflict's intensity and duration uncertain, "the likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally, when international food and input prices are already high and vulnerable," said Qu Dongyu, director-general of the Rome-based Food and Agriculture Organisation (FAO).

The UN agency, known as FAO, also noted that Russia is the lead producer of fertiliser, and a key fertiliser component — urea — has jumped more than threefold in price in the last 12 months.

Also worrisome, Qu said in a statement, is the uncertainty over whether Ukraine’s farmers will be able to harvest wheat ready in June. In Ukraine, "massive population displacement has reduced the number of agricultural labourers and workers. Accessing agricultural fields would be difficult,'' Qu noted.

Even if they could, Ukraine’s ports on the Black Sea are shuttered and its government this week banned the export of wheat, oats, millet, buckwheat and some other food products to prevent a crisis in its own country and stabilise the market.

Ukraine’s ban does not apply to its major global exports of corn and sunflower oil. It and Russia together account for 52% of the world's sunflower oil export market. They also account for 19% of the world's barley supply, 14% of wheat and 4% of corn.

"It is still unclear whether (other) exporters would be able to fill this gap,'' Qu said, warning that wheat inventories are already running low in Canada.

The United States, Argentina and other wheat-producing nations are likely to limit exports as governments seek to ensure domestic supply, he said.

Adding to the pressure, countries that rely on wheat from Russia and Ukraine are likely to increase import levels. Egypt, Turkey, Bangladesh and Iran buy 60% of their wheat from Russia and Ukraine. Also heavily reliant on those two countries' wheat exports are Lebanon, Tunisia, Yemen, Libya and Pakistan.

"Supply chain and logistical disruptions on Ukrainian and Russian grain and oilseed production and restrictions on Russia's exports will have significant food security repercussions,'' Qu said.

FAO cautioned that if the conflict triggers a "sudden and prolonged reduction” in food exports by Ukraine and Russia, it could further drive up pressure on international commodity prices "to the detriment of economically vulnerable countries.”

SKYROCKETING FOOD PRICES: The UN agency said its simulations suggest that "the global number of undernourished people could increase by 8 to 13 million” in 2022-2023, particularly in Asia, sub-Saharan Africa, the Middle East and North Africa. Potential for unrest could rise with the prices.

Mohammed Jassim, who owns a small bakery in Baghdad, said there was real concern in Iraq, where dozens of people held demonstrations in the past week over skyrocketing food prices.

"I am a consumer who buys staples for my business, and I have seen an increase of about 20% in the price of sugar and wheat,” he said. "Of course, this increase means that I will need to raise the price of my products. Until now, I haven’t increased prices as I am absorbing the price difference. But if this keeps up, then I will be forced to raise my prices, and ultimately, the average citizen will be the one to pay for it.”

Meanwhile, alternative sources might only be able to partially compensate for the shortfalls in grain and sunflower seed exports by Ukraine and Russia, FAO said.

"Worryingly, the resulting global supply gap could push up international food and feed prices by 8 to 22% above their already elevated levels," FAO’s report said.

According to FAO figures, food prices reached an all-time high in February. The COVID-19 pandemic already had a major impact on global food security, Qu said.

Last year, global prices of wheat and barley rose 31% and rapeseed and sunflower oil prices jumped by more than 60%. Wheat prices have surged more than 50% since a week before the invasion.

Some consumers are already feeling the effects of a drop-off in exports as well as steep prices. In Italy, supermarkets in Tuscany and Sardinia are limiting sales of sunflower seed oil to two containers per customer, Italian state TV said. Spanish supermarkets are also rationing it.

While the Italian diet is associated with olive oil, sunflower oil is used commercially to produce mayonnaise, sauces and some processed foods. Italian importers of the seed for processing into oil say their supply has already dried up.

Associated Press