Ukraine in the loop : 03/03/2022

Thursday March 3rd, 2022

By Editeur

While the Russian military has taken Kherson, a large city in the south, new talks are to take place this morning between Russian and Ukrainian delegations.

Some European countries are particularly worried about the economic fallout of the war in Ukraine on the prices of gas, oil but also wheat and other grain products. Janusz Wojciechowski, European Commissioner for Agriculture, notably said that wheat prices are going through the roof, and those of rapeseed, sunflower and corn are following suit, and that this inflation is already having “serious consequences for livestock farming in Europe”.

In fact, according to the Observatory of Economic Complexity (OEC), Russia and Ukraine together, exported more than a quarter of the world’s wheat in 2019, making Russia the world’s largest exporter of wheat. The attack and control of Ukraine’s port cities by Russian forces is paralyzing exports, and similarly, Western sanctions are likely to have an indirect effect on Russia’s exports, either in terms of finance or means of export.

However, this inflation could have consequences far beyond the borders of European countries as some of the Middle East and North Africa’s countries are heavily reliant on wheat imports from Ukraine and Russia. According to a Foreign Policy article, even before the war began, global markets were already strained by the ongoing pandemic and regional droughts, which squeezed production and fueled inflation around the world. 

Several organizations fear that it  will increase the pressure on food security in these countries. In particular, Save the Children, stressed that wheat is predicted to rise up to 50% in some countries.  Notably, in Lebanon, up to 80% of wheat imports come from Russia and Ukraine and in Yemen, where over half of the population is facing acute hunger, more than 30% also come from Russia and Ukraine. The World Food Programme has commented on the situation in Yemen, noting that : “We have no choice but to take food from the hungry to feed the starving and, unless we receive immediate funding, in a few weeks we risk not even being able to feed the starving”. The list of countries heavily reliant on wheat imports from the two countries also includes Egypt, Iraq, Algeria and Tunisia.

In addition, a Foreign Policy article also warned that the global fertilizer supply may be disturb as Russia is one of the world’s biggest producers, leading to consequences that could be felt beyond the wheat market.