Both Ukraine and Russia are important food exporters to the global markets. According to FAOSTAT, nearly 30 countries have relied on Ukraine and Russia for at least 50 percent of their wheat imports during the last five years. Russia is the largest wheat exporter in the world and Ukraine is the ‘breadbasket of Europe’ and a major exporter of wheat, maize and sunflower oil. Both countries accounted for about 30% of the global wheat market in 2021.The conflict between the two major crop exporters and economic sanctions imposed by the West against Russia and its oligarchs, in addition to the ongoing COVID-19 pandemic have created further downward pressure on the global economy (He, 2022).

The Russian-Ukrainian conflict that began on the 24th of February 2022 has caused loss of life, citizens’ displacement, and massive destruction of infrastructure in Ukraine. More than 6.4 million people had been forced to abandon their homes and flee across borders to safety, while millions more are internally displaced. The conflict has resulted in the suspension of commercial operations in Ukraine’s ports, hampering the country’s ability to export its products. Nearly 50 countries depend on the Russian Federation and Ukraine for at least 30 percent of their wheat import needs. Subsequently, the FAO Cereal Price Index achieved a record value in March 2020 (since 1990).

Figure 5.10 Share of total world exports for major food-related commodities (2020). Source: World Integrated Trade Solution, WITS (2022).

   Figure 5.11 The situation of the conflict between Russia and Ukraine

The participation of the Ukraine in the world market is indispensable for the global food supply. The fertile black soils are key to the high productivity of  Ukrainian agriculture. These soils have a high humis content and therefore can store large amounts of nutrients and moisture. The Ukranian black soils account for  40% of the total black soil area in the world. They are  mainly concentrated in the central and eastern regions of the country. 

Since 24 February 2022, the conflict between Russia and Ukraine has expanded significantly. As the winter crops were already planted in the previous year, the conflict had no impact on the planted area for winter crops. Since 19 April, the conflict reaches Ukraine’s eastern Donbas region. It has put eastern Ukraine major winter crops producing regions in the front line of the conflict. It is likely to cause the proportion of harvest in the conflict zone to drop to about 60%, which means that about 1.2 million hectares of winter crops cannot be harvested, including about 900,000 hectares of wheat crops.

Figure 5.12 The distribution of winter crops in Ukraine

The situation for spring crops is more worrisome. The lack of labor, fuel and agricultural inputs in the southern regions due to the conflict has had a significant impact on the sowing of spring crops. The Ukrainian government estimates that 50-70% of agricultural land is usually grown with summer crops. According to a survey conducted by the Ukrainian government, four out of five of nearly 1,300 large agricultural enterprises do not have enough fuel to plant this summer.

Labor and the accessibility of the farms might be another issue. More than 6.4 million refugees have left Ukraine,[1]. Approximately one-quarter of the country's total population had left their homes in Ukraine by 20 March. This will have a dramatic effect on the management and harvest of winter crops. Safety is a problem for farmers when operating machinery in the field.

Ukraine is also the biggest exporter of sunflower oil and the second largest of barley. Global agricultural markets have endured supply-side shocks and price spikes before. Even before the conflict started 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. According to the Global Report on Food Crises 2022, about 193 million people face acute food insecurity in 2021. This represents an increase of nearly 40 million people compared to the previous high reached in 2020.

With the closure of Black Sea ports, exports of cereals have been drastically reduced [FAO, AMIS]. Grains exports are currently limited to 500,000 tons a month, down from as much as 5 million tons before the conflict [Bloomberg]. Previously, 96% of Ukraine's grain, oilseeds and vegetable oils were exported by sea. The situation has now changed to 70% by rail and 30% through the only two ports currently in operation - Reni and Izmail on the Danube.. The Ukrainian government has asked the EU to plan for storage and logistic support for the next harvests [Ouest France].

Global wheat exports in 2021 were 206 million tons. The combined wheat exports of Russia and Ukraine  accounted for nearly 28.5% of the global share. Ukraine exported 24 million tons of wheat, accounting for 11.6%.  Russian wheat exports of amounted to 35 million tons, accounting for 16.9% of global wheat exports. It was the world's largest wheat exporter.

The current Russia-Ukraine conflict has had a major impact on the global food security situation, with wheat prices having risen by 44% so far this year. From March 2021 to March 2022, India's wheat exports totaled 7.85 million tons, a 275% increase from the previous year. An extreme and ongoing heatwave has cut into India’s wheat harvest. The worst affected Indian states due to the heatwave were the two major wheat-growing regions – Punjab and Haryana. In order to stabilize domestic prices, India banned exports in May.

In 2020/21, Ukraine was the world's largest exporter of sunflower oil, accounting for 47% of exports, followed by Russia (29%), Argentina, the European Union (EU) and Turkey (6-7% each). Sunflower production is mainly located in the east, north and south of the country, i.e., the areas most affected by the conflict. It will dramatically affect the supply of sunflower oil.

Figure 5.13 FAO Food Price Index

Reference:

He Changchui, Cooperation key to overcoming global food crisis, China Daily Global, 12 May, 2022. 

https://www.chinadaily.com.cn/a/202205/12/WS627c4b50a310fd2b29e5c16e.html