Russia’s invasion of Ukraine in February has become a costly war, not only in terms of devastating human casualties. While Ukraine, known as the “breadbasket of the world”, is a major producer of conventional and organic crops such as wheat, barley, sunflower oil, etc., the war causes major disruptions in agriculture and trade, and now the highest food prices the world has ever seen.
The Food and Agriculture Organization of the United Nations (FAO) warned in March that food prices could rise by up to 20% due to the conflict in Ukraine, raising the risk of increased malnutrition and of social unrest in the world. Tracking the world’s most traded food commodities, the FAO said food prices are at their highest level since records began 60 years ago, jumping 13% in March, after the record increase in February.
According to the UN Food Price Index, released in early April, the cost of vegetable oils increased by 23%, while that of cereals increased by 17%. Sugar increased by 7%; meat increased by 5%; while dairy products, which were less affected by the war, rose 3%. Food prices were at their highest level in 10 years before the war in Ukraine due to global harvest problems, the UN reported.
Russia and Ukraine alone account for 30% of global wheat trade, 32% of barley, 17% of corn and more than 50% of the global sunflower oil and seed market, reports The Brussels Times. In fact, the flag of Ukraine partly represents the blue sky above the wheat fields. And, as the war has choked off supplies from Ukraine, the world’s largest exporter of sunflower oil, the costs of alternatives have soared.
Planting season in Ukraine disrupted
As the war drags on into the spring, and with Russia’s ongoing campaign targeting agricultural areas to the east, one wonders if Ukrainian farmers can plant much of anything this year. If they put their crops in the ground, production could be limited due to scarcity of seeds, fertilizers, fuel and other inputs, much of which comes from port cities, including Mariupol, which are under siege. Ukraine alone exported more than $27 billion in agricultural products to the world in 2021, according to the American Farm Bureau Federation.
Jörg-Simon Immerz, head of grain trading at BayWA, Germany’s largest agricultural trading group, said: “Zero grain is currently exported from the ports of Ukraine – nothing leaves the country at all. »
The longer the war lasts, the more the poorest countries in the world will suffer. Many countries in Africa and the Middle East depend on wheat imports from Russia and Ukraine: Lebanon gets 80% of its wheat from Ukraine, while Egypt gets 80% of its wheat from Ukraine and from Russia; Somalia and Benin are 100% dependent on wheat from the two warring countries. Deutsche Welle TV reported that shortages of wheat from Ukraine are particularly felt in East Africa where the price of bread and sunflower oil has more than doubled since the start of the war.
Organic farming regions of Ukraine are under occupation
Ukraine is one of the world’s leading producers of organic crops. According to European Commissionthe country was the largest exporter of organic products to the European Union in 2019 and the second largest exporter of organic products in the world.
In 2020, Ukraine had 1.1 million acres of organic agricultural land, reported Ukrainian bio information. However, much of this land is in areas where there is currently hostilities or occupation. The Kherson region, for example, which is the largest organic region in Ukraine, is almost entirely occupied by Russian troops, the organization noted.
Exports notwithstanding, humanitarian concerns also revolve around Ukrainian farmers and the country’s ability to feed itself. The Swiss-based Research Institute for Organic Agriculture (fiBL) said in mid-April that the institute and its partners – Organics International, Helvetas and IFOAM Organics International – were working to assess stakeholder needs. and provide support. “It is important to ensure that Ukrainians have access to healthy and nutritious food grown in a sustainable way and that (organic) farmers do not lose their livelihoods. food and feed – now and in the future. »
Low-income households in the United States are disproportionately affected
Low-income households around the world, including in the United States, are being disproportionately affected by the drastic rise in food prices, triggered by two years of economic and supply chain disruptions resulting from the coronavirus pandemic. COVID-19 and exacerbated by the Russian-Ukrainian conflict.
According to Consumer Price Index data from the U.S. Bureau of Labor Statistics released in April, take-home food prices have risen 10% over the past year, the fastest pace since March 1981. Food and energy costs pushed inflation up to 8.5% in March from the same month a year ago, marking the highest rate in more than 40 years as consumers continue to feel the pinch of higher prices.
Bank of America analysts predicted on April 21 that the impact of the Russian-Ukrainian conflict has yet to be fully felt in grocery stores. “Looking ahead, we believe consumers will continue to feel the pinch of elevated food inflation,” the analysts wrote. “While the shock of the Russian-Ukrainian conflict has garnered a lot of attention, we believe it is too early to see the impact at the grocery store…it should instead lead to sustained price increases later this year.”
Bank of America analysts expect U.S. food inflation to hit 9% by the end of 2022, Fortune reported.
Bank of America analysts noted that farmers are also facing spikes in the cost of inputs, including fertilizers and pesticides, which have risen 50% in the past year alone, based on indices of producer prices from the United States Bureau of Labor Statistics. Russia was one of the world’s top exporters of fertilizers in 2020, including urea and potash, according to the Observatory of Economic Complexity, and fertilizer prices were also fueled by rising gas costs natural, used in the production of nitrogen-based fertilizers.
“There are signs that businesses are facing higher costs,” the Bank of America team wrote. “Margins appear to be increasing at both the wholesale and retail level, suggesting that companies have regained pricing power and are comfortable letting the consumer bear higher costs for them.”
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