Russia's blockade of the Black Sea has sent food prices skyrocketing around the globe, with poorer countries being affected most severely. But if the blockade continues, then the cost of a vast variety of foods looks set to go even higher.
KYIV — The longer Russia continues its naval blockade of Ukraine's ports along the Black Sea, the louder the alarm grows about hunger for millions of people around the world. The blockade poses systemic threats to global food security, with developing countries being affected most severely.
As a report by the UN Development Program makes clear: "The consequences of the war in Ukraine have disrupted energy and food markets. Among many other factors, supply chain disruptions and price spikes for key commodities are pushing the world into a dangerous inflationary spike. This will have immediate and devastating effects on household welfare, with those in poverty and near-poverty will be hit hardest."
However, we're just beginning to feel the effects of the war on food prices. The worst is yet to come.
Tipping millions toward starvation
The authors of the UN study indicate that due to the unprecedented price hikes, the food many could afford yesterday is no longer attainable today. In particular, they mention the "direct and devastating impacts on the poorest households in the countries of the Caspian Sea and sub-Saharan Africa."
Achim Steiner, the administrator of program, noted: “This crisis is tipping millions of people into poverty and starvation at breathtaking speed. Meanwhile, the threat of increased social unrest grows by the day."
According to the Kyiv School of Economics, the countries that will suffer the most from the blockade are Egypt, Yemen, Syria, and Lebanon. The blockade of Ukrainian exports could also lead to crises in other countries of the world. This has already happened in Sri Lanka, as U.S. Secretary of State Anthony Blinken said on Sunday, July 10. Food insecurity has also already hit Thailand hard.
2023 could get much worse
About 20 million tons of grain are stuck in Ukraine. In addition, more than one million tons of new grain has already been threshed. In total, in 2022, the harvest may reach about 30 million tons more. As Andriy Dykun, chairman of the Ukrainian Agrarian Council, predicts, in early autumn, without a full unblocking of ports, surplus grain will amount to 55 million tons.
The problem is compounded by the fact that Ukraine does not have the capacity for long-term storage of grain, because its crops were always exported. “We will have approximately 10 million tons of grain for which there is no storage,” Dykun says.
Andriy Stavnitser, co-owner of one of the largest private ports in Ukraine, says that for long-term storage, which means longer than a year, special containers with aeration are needed to prevent fungus and rot.
We will face not only a food crisis but also a shortage.
Despite the fact that Ukraine is constantly increasing exports by rail and road, the most optimistic estimates of possible volumes are almost two million tons per month. As Andriy Yarmak points out, even exporting 2 million tons is about 20% of the total amount. And if the blockade is not completely lifted this year, the entire production of the country will eventually, particularly in 2023, begin to readjust to this volume.
Andriy Yarmak suggests that the global market will begin to feel the decrease in exports from Ukraine in the second half of 2022, as it has so far used stocks from the 2021 harvest. In his opinion, with the harvest of 2023, the situation will worsen significantly. "I spoke with people working in Yemen and Syria. In Yemen, the situation with food availability is critical. It is also very difficult in Syria," he said.
Grain harvested in the Kherson region
What sunflower, soybean and rapeseed beget
Cereal crops in Ukraine are not only wheat and rye. The country also produces cereals, oil seeds and legumes. In addition, they are used not only for groats or grinding flour. A significant amount is also used as fodder for animals: approximately 65-70% of Ukraine's agricultural exports are fodder or fodder components. The main countries it exports to are China and Turkey. However, regionally, it is the Middle East and North Africa, the EU, and then Asia.
"Our grain is mainly fodder grain, which certain countries accumulate to feed animals. So, by the end of the year, according to our calculations, their stocks will run out, and they will have no fodder. Accordingly, we will face not only a food crisis but also a shortage of protein-containing products, particularly, meat," Andriy Stavnitser said.
Ukraine is the largest exporter of feed components in the region.
As Andriy Yarmak added, apart from actual grain and cereals, Ukraine also produces sunflower, soybean and rapeseed, which was also exported as fodder, because meal and oil seeds are a source of protein for livestock. And this is connected with the production of milk, meat, eggs, and even fish, which are also fed with meal.
"Ukraine is the largest exporter of feed components in the region. All other major exporters are in America. There is simply no one to replace Ukraine and it is physically impossible. Ukraine's absence from the market will begin to affect the world prices of meat and dairy products in late summer — in early autumn 2022," Yarmak believes.
In his opinion, due to a number of factors — the increase in prices for fertilizers and chemicals, drought, and the lack of grain from Ukraine — the situation with food prices in 2023 looks even more threatening.
Consequently, the current high prices for grain, vegetable oil, meat, fish, and dairy products in the world are currently far off their potential peaks. In the second half of the year, the world may witness a serious increase in the prices of all food products, and this trend will continue in 2023.
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