November 17th, 2022
The unfolding crisis in Ukraine has roiled commodity markets and threatens global food security. Ongoing fallout from the COVID-19 pandemic and other factors have already driven up food prices. Poor harvests in South America, strong global demand, and supply chain issues have reduced grain and oilseed inventories and driven prices to their highest levels since 2011-2013.
Over the past 30 years, the Black Sea region has emerged as an important global supplier of grains and oilseeds, including vegetable oils. In the early 1990s, following the breakup of the former Soviet Union, the region was a net importer of grain. Today, Russia and Ukraine exports account for about 12% of total calories traded in the world, and the two countries are among the top five global exporters for many important cereals and oilseeds, including wheat, barley, sunflowers and maize. Ukraine is also an important source of sunflower seed oil, supplying about 50% of the global market.
Looking forward to 2022 crops, the Luhansk and Donetsk oblasts of the Russian Federation account for about 3% of Russia’s barley production, 2% of wheat production, 3% of sunflower seed production, and a negligible share of maize production. The areas of Luhansk and Donetsk are in the easternmost part of the oblasts bordering with Ukraine. However, large areas of production are in Ukraine that directly border with Russia and Belarus. Between 25%-30% of maize and sunflower seed production, 10%-15% of barley production and 20 to 25% of wheat production are in Ukraine.
What’s in for the world in 2023 with regard to food supply chain
Will the blockade and disruption by the Ukrainian forces cause a massive food crisis in not just the developing world, but also in EU, and the USA? This blockade is a major worry for the vast majority of nations, especially poor countries like Somalia, Sudan, and Djibouti. This disruption will have some severe implications on the lives of the people in these countries as day-to-day cost increase will create a massive scare of starvation next year.
Let’s look at some statistics of food supply from Ukraine in 2021 and 2022.
As per the map above, between 2019 and 2021, Ukraine was a major supplier of wheat to African nations, as well as some Asia Pacific countries, but since February 2022 it has been estimated that the major importer of grains from Ukraine is EU as they are facing steep price rise, inflation like never seen before, and recession-like conditions.
Russia’s Black Sea Flagship Vessel Damaged in Ukrainian Strike
Russia’s Black Sea flagship vessel, «Admiral Makarov», was damaged and possibly disabled during a drone attack by Ukrainian forces. This attack could lead to some serious consequences and could cause some real issues for the food safety program, as the Russian government might think about withdrawing the country from the grain deal, which could prove to be deadly for the nations that totally depend on grains supply from Ukraine and Russia.