War in the ‘breadbasket of Europe’ is having a big impact on food security across the continent and the wider world. Crop shortages and the rising prices of food, fuel and fertiliser could become a source of further conflicts.
Ukraine is a major exporter of wheat, corn and sunflower oil – and the Russian invasion is expected to lead to a further deepening of global food insecurity. Even before the war in February 2022, many countries around the world were struggling to get access to adequate food supplies following the economic downturn triggered by Covid-19. Between 720 and 811 million people went hungry in 2020, and this number is expected to go up in 2022 (United Nations, UN, 2021).
War always results in deaths, destruction and forced displacement. As of 20 March 2022, 977 verified civilian deaths have been recorded, with 1,459 reportedly injured (UN Office of the High Commissioner for Human Rights, OHCHR, 2022). More than three million Ukrainians (about 4.5% of its population) have fled to safety in other countries (OHCHR, 2022). It is difficult to verify these numbers, and many commentators fear the toll could be far higher. Nevertheless, this substantial shock to the local population is likely to have an adverse effect on the country’s capacity to produce and export food products.
In response, severe economic sanctions have been levied on Russia in a bid to end the war. Potential Russian responses to the sanctions could also have a negative effect on global food supplies.
How is the war affecting food production?
Russia and Ukraine – together sometimes called the ‘breadbasket of Europe’ – are top producers and exporters of several important grains (such as wheat and maize) and vegetable oils (see Table 1).
Table 1: Ranking of world production of major food crops (2020)
|Sunflower seed or cottonseed oil
|Wheat and meslin
Figure 1: Share of total world exports for major food-related commodities (2020)
Source: WITS (2022)
Ukraine is the world’s largest producer of sunflower oil and, combined with Russia, it is responsible for more than half of global exports of sunflower oil (Figure 1). The region is also responsible for over a third (36%) of wheat exports (making it the world’s largest exporter of wheat).
Nearly every continent depends on them for either sunflower oil or wheat. In 2018, the European Union (EU) and other European countries were among the top importers of Russian and Ukrainian sunflower oil, with Southeast Asia and the Middle East the largest importers of the region’s wheat (Figure 2).
Instability in the region is therefore likely to affect food supply in the importing countries, many of which are currently food-insufficient – a situation where there is not enough food to eat.
Figure 2: Importers of Russian and Ukrainian sunflower oil and wheat (2018)
Source: WITS (2022)
The Russian invasion has resulted in the suspension of commercial operations in Ukraine’s ports, hampering the country’s ability to export its products. A halt in agricultural exports is bad for Ukraine as agriculture is a major source of its export revenue – 45% in 2020, amounting to $22.2 billion (International Trade Administration, ITA, 2022).
At the time of writing, there are still a few weeks left before the spring planting season in Ukraine. But with intense fighting continuing, and farms either shut down or occupied by Russian soldiers, future food output is very likely to be jeopardised. Former Ukrainian agriculture minister Roman Leshchenko has said that the country’s spring crop sowing area could be less than half what it was in 2021 (Reuters, 2022).
Farmers may be incentivised to ‘eat their seed’. Many other producers have fled the war to neighbouring countries for their own safety. Whether the displaced population will restore balance in global food supply by going into farming in their host nations is questionable, certainly in the short term. Others that remain in the country are presumably fighting or supporting the war effort.
The Irish government has launched a €12 million crop growing scheme to boost planting of barley, wheat and oats to help make up the drop in production in Ukraine. But many farmers have said that the incentive payments are too small to ‘counter the surging cost of fertiliser and fuel’ (Financial Times, 2022).
In addition to the effects on the population, and therefore workforce, the destruction of farms and storage facilities, and the transformation of tractors into armoured vehicles, are all contributing to a reduction in food production (Bloomberg, 2020). In times of war, farmers also reduce the time they spend on the farm for security reasons (for example, in response to an imposed curfew).
Reduction of food production in Ukraine translates into low or no exports. Ukrainians may start hoarding food for survival, or even seek to profiteer from the situation.
Russia could also retaliate in response to the severe economic sanctions placed on it, by restricting food supplies (as in 2010, when Putin placed a ban on exports of grain following a severe drought that hit the country).
Overall, the war affects food supply everywhere – in the conflict zones as a result of a fall in food production, and the rest of the world due to a drop in the export of major staple food commodities.
How is the war affecting the prices of food, fuel and fertiliser?
Scarcity of food has led to rising prices within the conflict zone and elsewhere in the world. Both local and global markets are stressed because food demand is high while supply has been restricted (and is becoming increasingly expensive). Rising food prices mean rising food insecurity.
Food prices have been rising since January. The Food and Agriculture Organization (FAO) of the United Nations reports that the food price index is 24.1% higher than it was a year ago, and similar trends have been experienced across the world (FAO, 2022). In the UK, for example, food price inflation hit 4.3% in February 2022, the highest in about a decade (Office for National Statistics, ONS, 2022).
In Ukraine, household income has fallen while poverty is rising. This is due to deaths of household heads (such as parents), job losses following destruction of infrastructure and businesses, and reduced economic activities. Forced migration to countries still grappling with post-pandemic recovery has also contributed to the crisis. Loss of income makes it more difficult for Ukrainians to access food, especially against the backdrop of rising prices.
In other parts of the world, rising food prices reduce the real incomes of households, pushing more people into the food poverty trap. This effect is graver in developing regions, where a larger part of people’s disposal income is spent on food. For example, a further rise in food prices would be more severe for an average household in Nigeria, which spends 56.4% of its income on food, compared with an average household in the UK, whose share of food expenditure is only 8.2% of their income (see Figure 3).
Figure 3: Share of income spent on food
Panel A – highest share
Panel B – lowest share
Source: ERS, United States Department of Agriculture (2015)
Russia is the third largest petroleum and liquid fuels producer in the world, after the United States and Saudi Arabia. It is the second largest exporter of crude oil after Saudi Arabia (see Table 1 and Figure 1). Russia is also a major fertiliser producer and exporter.
Sanctions on Russian oil companies and the planned ban on Russian oil have triggered an increase in fuel prices in the international market. The price of Brent crude for delivery on 21 March 2022 stood at $122 per barrel – the highest since 2015. Although oil-exporting nations like Saudi Arabia and Qatar will benefit from this price rise, oil-importing nations will feel the brunt as import bills are set to rise.
Figure 4: Daily Brent front-month futures contract price (2014-2022)
Source: Energy Information Administration (2022)
Note: The blue line illustrates the $100 per barrel mark
The movements fuel and food prices are closely linked (Karel and Krištoufek, 2019; Debdatta and Mitra, 2017). Even countries that are self-sufficient in grain production, such as the UK (which produces 90% of wheat consumed locally), could be affected by the knock-on effect of rising fertiliser and fuel prices. Eventually, the burden of a higher cost of food production, storage and transport is passed on to the consumers through higher food prices.
Will the conflict change what people eat?
Falling food supply coupled with rising food prices and with reduced real incomes will make it difficult for people to enjoy a nutritious diet in many countries. There may be a shift in consumption patterns towards cheaper food substitutes, such as cassava. Besides other global factors, such as rising fuel and fertiliser prices, an increase in demand for these substitutes could also see their prices rise, depending on the degree of substitutability.
Whether such a shift will be temporary or permanent depends on a host of factors such as expectations about the duration of the war or the possibility of a global food price contagion. For example, households might decide to continue consuming wheat, despite the price rise if they expect that the conflict will end soon and the price of wheat will revert to its pre-war level.
Could the food crisis generate further conflict?
As a conflict intensifies, food can become even more scarce. This means the few remaining food stocks become increasingly expensive or insufficient (especially if rationed by the government). Either way, food becomes difficult to access.
This situation, where many hands are pursuing very scarce and expensive food resources, could incite civil conflict – as witnessed during the Arab spring, an event partly a reaction to high cereal prices. In the besieged Ukrainian city of Mariupol, reports have emerged of people attacking one another in desperation for food (Business Insider, 2022).
This ‘fight-food-fight’ narrative has been established in many economic studies, and implies that conflicts can arise as a result of struggles over limited resources such as land, food or people (Collier and Hoeffler, 2005; Harari and Ferrara, 2018). This vicious conflict cycle continues unless there is an external intervention in form of financial and food aid, or if the conflict in question comes to an end (which is the most effective).
What we do not know
War is costly. Beyond the present destruction and devastation, the process of reconciliation, rehabilitation and reconstruction post-war is very expensive.
Figure 4: Global growth projections (October 2021)
Source: International Monetary Fund (2021)
Whether the economic crisis is due to war, the changing climate or Covid-19, the consequences for global food supply are similar – low supply and high prices. But unlike with the pandemic, where most economies around the world bounced back quickly as projected by the IMF (Figure 4), we do not know how long it will take for food supplies to recover to their pre-conflict state. It will depend on several factors: the extent of the devastation, the effectiveness of foreign interventions and aid, and how quickly Ukrainian farmers can be trained and deployed to farms.
The long-term impact of low food imports is not yet clear. In the past, it has been suggested that low imports can make reliant nations look inward and strive towards greater food self-sufficiency (The Guardian, 2020). But whatever happens in the long run, what we know is that in the short term, local food production will not be able to compensate for lower imports, worsening food scarcity and insecurity as a result.
What way forward?
Global food supply has been affected directly and indirectly. It has been hit directly by shortages in food production, import restrictions, higher food bills and falling incomes – and indirectly by fuel and fertiliser price inflation. Acute hunger may motivate farmers to eat what they were previously planning to cultivate, which could reduce the next season’s planting capacity. Even where local farmers in developing countries seem to benefit from rising international food prices, such gains are eroded by falling real incomes.
There is an urgent need for an aggressive external intervention to avert a food crisis. Information sharing among countries about their food status, as well as keeping borders open for agricultural exports, as proposed by the G7 agriculture ministers, are important responses to the brewing food crisis.
Beyond providing ammunition and other supplies for Ukraine’s war effort, and financial aid for the ailing populace, it may make sense to send in farmers to help to revamp the agricultural sector in Ukraine, once the fighting subsides. But when it will be safe to do so remains highly uncertain.
Where can I find out more?
- The International Food Policy Research Institute blog gives an insight into the economic impacts of the Russian invasion on global food systems.
- The IMF blog details how the war in Ukraine is affecting different sectors in several parts of the world.
- A series of podcasts from The Economist discuss the several channels through which the war in Ukraine will affect global food supply.
Who are experts on this question?
- Sascha O. Becker
- Lotanna Emediegwu
- Erkal Ersoy
- Wandile Sihlobo
- David Ubilava
- Alfons Weersink