The war in Ukraine has slammed into a world food system that was already buckling, sending grain prices past their 2008 crisis peaks and threatening hikes of the kind households faced after the global financial crisis.
In recent days wheat, maize and soya beans have all blown through their 2008 price peaks; maize sits just under its 2013 high and soya beans are back at 2012 heights. “The devastating consequences of the Russian onslaught on Ukraine are also felt in places far away. Grain and oil prices are fast approaching or even surpassing levels not seen since the 2008 food and fuel crisis,” said Arif Husain, chief economist of the UN World Food Programme.
The invasion landed on markets already strained by climate chaos and Covid. Ukraine is the fifth largest wheat exporter, about 10% of the global market, and a top maize supplier at roughly 15% of exports; Russia, the biggest wheat exporter at about 17%, is also the second biggest source of sunflower seed. The Black Sea region ships at least 12% of global food calories, and about 40% of its wheat goes to the Middle East and Africa.
Chicago wheat futures jumped 5.43 percent on invasion day, outpacing other commodities, and wheat had already climbed 80 percent between April 2020 and December 2021 on pandemic-era shipping chaos and rising farm costs, according to IMF data.
David Laborde of the International Food Policy Research Institute calculated that the shock would “likely have an immediate impact on the global wheat market stability,” with the real test coming four months out at harvest: “By then, if farmers could not harvest due to lasting military operations, or if port facilities and railroads have been damaged, the situation will be particularly gloomy.” North Africa and the Middle East, he noted, “are particularly dependent on wheat from Ukraine and Russia and likely to be hard hit.”
Before the war, one in 10 people worldwide already lacked enough food, and Covid had disrupted markets and transport across developing countries. Climate damage was at work too: durum wheat prices soared 90% late the previous year after drought and record heat in Canada, the US saw wildfires and extreme weather, Latin America dried out and Australia flooded. In the Horn of Africa, three straight failed rainy seasons have wrecked crops and killed livestock in abnormal numbers. “Harvests are ruined, livestock are dying, and hunger is growing as recurrent droughts affect the Horn of Africa,” said Michael Dunford, the WFP’s regional director for eastern Africa.
Gilbert Houngbo, who heads the International Fund for Agricultural Development, warned an extended war “could limit the world’s supply of staple crops like wheat, corn and sunflower oil, resulting in the skyrocketing of food prices and hunger,” adding that its continuation “will be catastrophic for the entire world, and particularly those that are already struggling to feed their families.”
Rabobank analysts calculated that two-thirds of the season’s Russian wheat and barley had already left port, but sanctions stripping out the rest could lift global prices by nearly a third. China, for its part, began approving Russian wheat imports in February, long blocked over fungus and contaminant concerns.
Sources
- Ukraine war piles pressure on global food system already in crisis | Food security | The Guardian
- Ukraine Invasion Threatens Global Wheat Supply – The New York Times
