How to contain the cascading impacts of war in ‘Europe’s breadbasket’

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: John Letzing, Digital Editor, Strategic Intelligence, World Economic Forum

• Ukraine and Russia supply significant portions of the world’s agricultural commodities.

• Potential food-related impacts of the war in Ukraine include social unrest in some places and regressive environmental responses in others.

• The UN food agency has outlined recommendations on how to react.

At a time when Ukrainian farmers normally start spring field work, many have instead been using their tractors to haul away abandoned Russian tanks and troop carriers.

And while Ukraine’s winter wheat harvest should be underway in about three months, a bloody, paralysing war has made getting to their crops increasingly treacherous. Fuel and fertilizer have been scarce, and commodities already headed to market are hindered by the same sort of logistical barriers and restrictions impacting Russia’s food exports – which, in addition, are being hit by sanctions.

The two countries typically provide much of the world’s grain, corn, oilseeds, and fertilizer. Ukraine, the 36^th biggest nation by population, is among the top five exporters of both wheat and barley. It’s now expected to export 4 million fewer metric tons of wheat this year than anticipated. Russia, the crop’s biggest exporter, is pegged for a decline of 3 million metric tons.

The situation may be devastating for relatively fragile places dependent on imports. In Lebanon, for example, a 2020 explosion at Beirut’s port decimated the country’s wheat silos and necessitated a continual flow of supplies; it normally draws 80% of its wheat imports from Ukraine.

There are fears that food shortages resulting from the supply crunch could trigger social unrest. They may also elevate interest in environmentally-damaging efforts to make up for what’s missing.

A key measure of global food prices hit a new all-time high last month, as mounting tensions gave way to an invasion. During a previous period of similar price levels in 2007 and 2008, riots broke out in dozens of countries. In Haiti, protestors were killed and a government collapsed.

A subsequent price spike in 2010 and 2011 coincided with the Arab Spring revolts that rippled through the Middle East and North Africa.

Now, even relatively-stable regions dependent on imperiled food imports could respond in ways that raise environmental concerns.

The European Union may let farmers skirt rules meant to preserve soils and biodiversity by planting crops for livestock on fallow land, while in the US a suggestion has been made to likewise open up protected land for sowing. In Brazil, efforts are underway to allow mining on indigenous land to shore up a fertilizer supply threatened by the war.

Ukraine and Russia, agricultural heavyweights

The Soviet Union, which included Russia and Ukraine, became a net importer of grain during its decades of collective farming. Concerted, state-led industry reforms and privatization followed the fall of communism, and the two nations now account for more than a quarter of the world’s wheat exports.

Ukraine has earned the moniker “Europe’s breadbasket.”

About 42 million of the country’s 60 million hectares of surface area are covered in agricultural land, and it has large quantities of highly-fertile “chernozem” soil. Much of its wheat is grown in the southeast, a region that includes areas that have suffered some of the heaviest shelling of the war so far.

Prior to the invasion of Ukraine, wheat stockpiles were already running low due in part to drought worsened by climate change.

As the situation in Ukraine has deteriorated, the cost of wheat and other commodities has rapidly escalated. Prices for flour and wheat brought into the Gaza Strip, a target of air strikes less than a year ago that reportedly displaced thousands of Palestinians, have risen by 20% as a result of the war in Europe.

Within the European Union, nearly a third of the fertilizer used normally comes from Russia, the world’s primary supplier. Threatened scarcity of that and other commodities has prompted some to call for scaling back the bloc’s green goals for the agricultural sector.

The UN food agency has spelled out policy recommendations for how to best respond to potential food shortages.

Countries that depend on food imports from Ukraine and Russia should look for alternative suppliers, and should diversify their domestic production, according to the agency – which also advocates for keeping “global food and fertilizer trade open.”

Before they do anything to help secure their own food supply, governments should consider the potential impacts on international markets, the agency says, adding that while export restrictions may help solve challenges in the short-term they may also drive up global prices.

Governments should also expand social safety nets to protect the most vulnerable, the agency says.

More reading on food and the Ukraine invasion

For more context, here are links to further reading from the World Economic Forum’s Strategic Intelligence platform:

• A farmer’s “breakeven ratio” is typically about 6 kilograms of grain to pay for 1 kilogram of nitrogen fertilizer, but according to this analysis it’s now risen to about 10 kilograms of grain – and using less fertilizer will only add more pressure to the global food system. (The Conversation)

• Preventing the humanitarian crisis in Ukraine from setting off a full-blown global food crisis requires directing more funds to food assistance in countries likely to be hardest hit, according to this piece. (The New Humanitarian)

• Oil-rich monarchies like Saudi Arabia that are the largest importers of barley from Ukraine and Russia may fear an impact on their livestock industry, according to this piece, but fragile states in the region will face the worst impacts of a food-price surge. (ISPI)

• “This crisis is beyond the normal ability to shuffle supplies around.” According to this report, one of the many challenges for Ukraine’s food exports is the destruction of a power grid needed to prevent crops in storage from spoiling. (Wired)

• Typical, crisis-induced “but price-pushing” export restrictions must be avoided as the world grapples with war-induced threats to the global food supply, according to this analysis. (German Institute for International and Security Affairs)

• A unique crisis unfolding in Afghanistan, according to this report – a survey found that 70% of households are unable to meet basic needs for food and essentials, as wages have declined dramatically for more than two-thirds of workers. (Al Monitor)

• More food security for Alaska – cold temperatures mean just 5% of food consumed in the state is grown or raised there, but according to this piece climate change bodes an increase in “growing degree days,” and much must be done to prepare. (GreenBiz)

On the Strategic Intelligence platform, you can find feeds of expert analysis related to the Future of Food, Peace and Resilience and hundreds of additional topics. You’ll need to register to view.