KYIV, UKRAINE — The continuing Russian aggression against Ukraine worsens the outlook for this year's sowing campaign in this key grain exporting country, threatening with soaring food insecurity primarily in the Middle East and Africa, and promising to create new hunger hotspots across the globe.
Ukraine has about 28.4 million hectares of sown area under various types of crops, of which 9 million hectares already are used for winter crops, and 13.8 million hectares are expected to be used for spring crops, estimated Svitlana Lytvyn, analyst of Ukrainian Agribusiness Club (UCAB). Still, 28% of land under spring planting is unlikely to see any sowing this year.
Ukraine troops pushed the Russian invaders out of the northern regions. However, life is yet to even partly return to normal. As explained by Lytvyn, the territories where the sowing campaign is likely to be a failure this year include zones of active hostilities as well as those already liberated from occupation, where it is impossible to carry out sowing due to mined fields and destroyed material and technical base.
Mined fields mainly have been encountered in the Kyiv, Chernihiv, and Sumy regions, that is, the regions that were under the temporary occupation of Russian troops. Work already has begun on demining these territories by the relevant services, but this process is quite lengthy and it is very unlikely that farmers will have time to carry out a sowing campaign in these territories.
“Even if the fields were at a certain distance from active hostilities, but there are suspicions of the presence of explosive residues after shelling, the appropriate services are called in to check the territories,” Lytvyn said.
Besides, numerous refineries in Ukraine have been destroyed, including outside of the regions where active fights took place.
“At the moment, the availability of fuel is the biggest resource-limiting factor,” Lytvyn said. “Ukrainian farmers are only provided with fuel for this sowing campaign by 40%. However, their needs are immediately (next in line) after the military. Both the agrarians and the government are doing everything possible to increase their supply of fuel for the food security of not only Ukraine, but the whole world.”
The lack of fuel is not the only challenge. On average, farmers are provided by 60% with equipment, 75% with seeds, and 80% with fertilizers. The lack of money to purchase these components of the sowing campaign is a particular issue.
“Due to the almost complete absence of exports due to the blockade of seaports, farmers have left products, the volumes of which exceed the internal needs of Ukraine and were intended for export and export earnings,” Lytvyn said.
Ukraine is trying to establish grain exports through the western borders by train. However, the capacity of such a route is significantly inferior to the capabilities of seaports and allows exporting no more than 10% of the previous Ukrainian volumes, UCAB estimated.
“At this pace, it will not be possible to eliminate the shortage of these products on the world market,” Lytvyn admitted.
Before the war, Ukraine exported 5 million tonnes of grain and 500,000 to 600,000 tonnes of sunflower oil by sea monthly. In March 2022, only 220,000 tonnes of grain and 15,800 tonnes of sunflower oil were exported, all by train.
Things can deteriorate further as the war is ongoing, as Ukrainians are expecting a renewed Russian offensive in the eastern region known as the Donbas. Some Ukrainian top government officials warned that Russia has yet to give up hopes of occupying the entire country, and the conflict still has the potential to escalate to new territories.
Food security concerns
Several international organizations have voiced concerns over the crippling effect of the Ukraine war on global food security.
The war has resulted in disruptions in food, energy and finance, affecting 1.7 billion people worldwide, Antonio Guterres, the head of the UN said, adding that as many as 36 countries count on Russia and Ukraine for more than half of their wheat imports, including some of the poorest and most vulnerable nations.
The war in Ukraine constrained exports from the country as maritime transportation is no longer available, and the export capacity of land-based transportation modes — which are also more expensive — is unlikely to fill in the gap, Monika Tokhova, an economist with the FAO, said adding that it was very likely that war-induced damages to the production and supply chain logistics would constrain the quantity of Ukrainian wheat available, at least in the near future.
Arif Husain, chief economist for the World Food Programme (WFP), warned that Middle East and North African countries are among the most vulnerable in the face of the current challenges.
“The fears are indeed very real,” Husain said. “The MENA region is exposed to the ripple effects of the conflict in Ukraine because several countries are big grain importers. Lebanon imports more than 50% of its wheat from Ukraine; for Yemen, the proportion is 22%; in Tunisia, it is 42%; Egypt, Syria, Algeria, Morocco, and Sudan are also heavily reliant on grain imports from Russia and Ukraine.
“Naturally, the effects are felt most in countries already struggling with food insecurity and food inflation, like Yemen, Syria, and Lebanon.”
He added that the first thing to expect is higher food prices making food even less affordable.
The FAO has raised concerns that countries that have already in the past experienced high levels of food insecurity due to often a combined impact of conflict, economic crisis, and natural disasters, are among those most disadvantaged.
“For example, in the broader MENA region, Yemen has been the center of one of the world’s biggest humanitarian crises,” Tokhova said. “About 17.4 million people in Yemen are now in need of food assistance. The humanitarian situation in the country is likely to get even worse between June and December 2022, with the number of people who likely will be unable to meet their minimum food needs in Yemen possibly reaching a record 19 million people in that period.”
High levels of food insecurity also prevail in the Syrian Arab Republic and Lebanon, she added.
Outside the MENA region, in parts of East Africa where the fourth consecutive dry season is looming, it is now estimated that the numbers of food insecure will increase. Other hotspots with a large number of people with emergency levels of food insecurity include Afghanistan, DRC, Ethiopia, Sudan, South Sudan, and Haiti, Tokhova said.
Paying the food bills
While the world’s poorest countries struggle to avoid a full-fledged humanitarian crisis, the wealthier parts of the world are likely to see the payment on the food bills rising.
The global market was in a tight position already before the war started, with prices at elevated levels. Consequently, an additional supply shock constraining exports will put upward pressure on prices. If constraints on the supply side continue, prices are likely to remain at elevated levels, Tokhova said.
“Countries relying on wheat, but also other grain imports will need to look for alternative suppliers,” Tokhova said. “A clearer picture is likely to emerge as the wheat crops in the northern hemisphere near harvest in the next few months.”
Even the countries in the MENA region are very heterogeneous, though the entire region generally relies on wheat imports to satisfy domestic needs, she added.
“For example, countries endowed with hydrocarbons are probably in a better position to finance increased food import bills,” Tokhova said. “Countries relying on tourism for foreign exchange — which has not fully picked up yet — might be in a less favorable position. Although should the usual quantities previously exported from Ukraine not be available on the markets, countries in the MENA region and elsewhere will have to find alternative suppliers, be ready to pay high prices as well as higher shipping costs.”
From the macroeconomic point of view, countries with balance of payments difficulties or those in danger of currency devaluation which would make imports more expensive might face additional challenges in securing grain imports, she added.
However, the problems in the Black Sea region could be partly compensated by other key grain suppliers. In the short run, the FAO expects that the European Union and India might be in a position to increase their exports.
“As the season progresses, other origins, including the United States, Canada, and Australia, could also contribute to mitigating the current crisis,” Tokhova said. “However, shipping from more distant destinations comes with higher transportation costs.”
Contributing to the market volatility are a growing number of countries that are putting restrictions on grain exports in a bid to constrain the rise in prices in their domestic market and tame food inflation.
For instance, the Kazakhs Agricultural Ministry has introduced quotas for the export of wheat and flour, the Ministry said in a statement on April 17. The new restrictions are scheduled to come into force by May 1 and are designed to last until June 15. Kazakhstan is the largest grain exporter in Central Asia, supplying wheat to Uzbekistan, Afghanistan, Tajikistan and Kyrgyzstan.
As estimated by the World Bank, the number of countries slapping on food-export restrictions jumped by 25%, bringing the total number of countries to 35 as of early April. In total, 53 new policy interventions affecting food trade had been imposed, of which 31 restricted exports, and 9 involved curbs on wheat exports.
The WFP said it strongly encourages countries to keep food trade flowing normally and not to put up trade barriers like export bans or import subsidies.
“This will only make the situation worse, feeding speculation and volatility on the food commodity markets,” Husain said. “It is important for countries to diversify their food and fuel import sources so to minimize the impact of external shocks.
“Unfortunately, in the near term, it is always the most vulnerable people who suffer the worse consequences. As the World Food Programme, our mission is to help end hunger and sound the alarm when we see threats to global food security.”