Ukraine War Threatens to Cause a Global Food Crisis
by Jack Nicas, March 20, 2022, NY Times

The war in Ukraine has delivered a shock to global
energy markets. Now the planet is facing a deeper crisis:
a shortage of food.

A crucial portion of the world’s wheat, corn and barley
is trapped in Russia and Ukraine because of the war, while
an even larger portion of the world’s fertilizers is stuck
in Russia and Belarus. The result is that global food and
fertilizer prices are soaring. Since the invasion last month,
wheat prices have increased by 21%, barley by 33%, and some
fertilizers by 40%.

The upheaval is compounded by major challenges that were
already increasing prices and squeezing supplies, including
the pandemic, shipping constraints, high energy costs and
recent droughts, floods and fires.

Now economists, aid organizations and government officials
are warning of the repercussions: an increase in world hunger.

The looming disaster is laying bare the consequences of a
major war in the modern era of globalization. Prices for food,
fertilizer, oil, gas and even metals like aluminum, nickel and
palladium are all rising fast — and experts expect worse as
the effects cascade.

“Ukraine has only compounded a catastrophe on top of a catastrophe,”
said David M. Beasley, the executive director of the World Food
Program, the United Nations agency that feeds 125 million people
a day. “There is no precedent even close to this since WWII.”

Ukrainian farms are about to miss critical planting and harvesting
seasons. European fertilizer plants are significantly cutting
production because of high energy prices. Farmers from Brazil to
Texas are cutting back on fertilizer, threatening the size of the
next harvests.

China, facing its worst wheat crop in decades after severe
flooding, is planning to buy much more of the world’s dwindling
supply. And India, which ordinarily exports a small amount of
wheat, has already seen foreign demand more than triple compared
with last year.

Around the world, the result will be even higher grocery bills.
In February, U.S. grocery prices were already up 8.6% over a year
prior, the largest increase in 40 years, according to government
data. Economists expect the war to further inflate those prices.

For those living on the brink of food insecurity, the latest
surge in prices could push many over the edge. After remaining
mostly flat for five years, hunger rose by about 18% during the
pandemic to between 720 million and 811 million people. Earlier
this month, the United Nations said that the war’s impact on
the global food market alone could cause an additional 7.6 million
to 13.1 million people to go hungry.

The World Food Program’s costs have already increased by
$71 million a month, enough to cut daily rations for 3.8 million
people. “We’ll be taking food from the hungry to give to the
starving,” Mr. Beasley said.

Rising prices and hunger also present a potential new dimension
to the world’s view of the war. Could they further fuel anger
at Russia and calls for intervention? Or would frustration be
targeted at the Western sanctions that are helping to trap food
and fertilizer?

While virtually every country will face higher prices, some
places could struggle to find enough food at all.

Armenia, Mongolia, Kazakhstan and Eritrea have imported
virtually all of their wheat from Russia and Ukraine and
must find new sources. But they are competing against much
larger buyers, including Turkey, Egypt, Bangladesh and Iran,
which have obtained over 60% of their wheat from the two
warring countries.

And all of them will be bidding on an even smaller supply
because China, the world’s biggest producer and consumer of
wheat, is expected to buy much more than usual on world
markets this year. On March 5, China revealed that severe
flooding last year had delayed the planting of a third of the
country’s wheat crop, and now the upcoming harvest looks bleak.

“This year’s seedling situation can be said to be the worst
in history,” said China’s agriculture minister, Tang Renjian.

Rising food prices have long been a catalyst for social and
political upheavals in poor African and Arab countries, and
many subsidize staples like bread in efforts to avoid such
problems. But their economies and budgets — already strained
by the pandemic and high energy costs — are now at risk of
buckling under the cost of food, economists said.

Tunisia struggled to pay for some food imports before the war
and now is trying to prevent an economic collapse. Inflation
has already set off protests in Morocco and is helping stir
renewed unrest and violent crackdowns in Sudan.

“A lot of people think that this is just going to mean that
their bagels are going to become more expensive. And that’s
absolutely true, but that’s not what this is about,” said
Ben Isaacson, a longtime agriculture analyst with Scotiabank.
Since the 70s, North Africa and the Middle East have grappled
with repeated uprisings. “What actually led to people going
into the streets and protesting?” he said. “It starts from
food shortages and from food price inflation.”

Countries afflicted by protracted conflict, including Yemen,
Syria, South Sudan and Ethiopia, are already facing severe
hunger emergencies that experts fear could quickly worsen.

In Afghanistan, aid workers warn that the humanitarian crisis
has already been exacerbated by the war in Ukraine, making it
more difficult to feed the roughly 23 million Afghans — over
half the population — who do not have enough to eat.

Nooruddin Zaker Ahmadi, the director of Bashir Navid Complex,
an Afghan imports company, said that prices were rising across
the board. It took him five days in Russia this month to find
cooking oil. He bought 15-liter cartons for $30 each and will
sell them at the Afghan market for $35. Before the war, he
sold them for $23.

“The United States thinks it has only sanctioned Russia and
its banks,” he said. “But the United States has sanctioned
the whole world.”

For the global food market, there are few worse countries
to be in conflict than Russia and Ukraine. Over the past
five years, they have together accounted for nearly 30% of
the exports of the world’s wheat, 17% of corn, 32% of barley,
a crucial source of animal feed, & 75% of sunflower seed oil,
an important cooking oil in some parts of the world.

Russia has largely been unable to export food because of
sanctions that have effectively cut it off financially.
Ukraine, meanwhile, has been cut off physically. Russia has
blocked the Black Sea for exports, and Ukraine lacks enough
rail cars to transport food overland.

What's now becoming more worrisome is the next harvest,
particularly in Ukraine. On March 11, Ukraine’s agriculture
minister begged allies for 1,900 rail cars of fuel, saying
that the country’s farms had run out after supplies were
diverted to the military. Without that fuel, he said,
Ukrainian farmers would be unable to plant or harvest.

There are other hurdles. The United Nations estimated that
up to 30% of Ukrainian farmland could become a war zone.
And with millions of Ukrainians fleeing the country or
joining the front lines, far fewer can work the fields.

Russian and Ukrainian wheat is not easily replaced.
Inventories are already tight in the United States and
Canada, according to the United Nations, while Argentina
is limiting exports and Australia is already at full
shipping capacity. Over the past year, wheat prices are
up 69%. Among other major food exports of Russia & Ukraine,
corn prices are up 36% and barley 82%.

The war also threatens another longer-term shock to the
food markets: a shortage of fertilizer.

Matt Huie, a farmer near Corpus Christi TX, said that
skyrocketing prices had already forced him to stop applying
fertilizer to the grazing fields that nourish his hundreds
of cows, assuring that they will be skinnier come slaughter.
Now he is worried he will have to also reduce fertilizer for
his next corn crop, which would slash its yield. “We’ve gotten
into uncharted territory,” he said.

Russia is the world’s largest fertilizer exporter, providing
about 15% of the world supply. This month, just as farmers
around the world prepared for planting, Russia told its
fertilizer producers to halt exports. Sanctions already
were making such transactions difficult.

Sanctions also have hit Russia’s closest ally, Belarus, a
leading producer of potash-based fertilizer, critical for
many major crops including soybeans and corn. But even
before the Ukraine war, Belarus’s fertilizer exports were
blocked because of sanctions over its seizure of an
expatriate dissident who had been a passenger in a Ryanair
jetliner forced to land in the country.

In another ominous signal to fertilizer customers, earlier
this month European fertilizer producers said they were
slowing or halting production because of soaring energy
prices. Many fertilizers are made with natural gas.

The world’s major fertilizers have now more than doubled
or tripled in price over the past year.

Brazil, the world’s largest producer of soybeans, purchases
nearly half its potash fertilizer from Russia and Belarus.
It now has just 3 months of stockpiles left. The national
soybean farmers association has instructed members to use
less fertilizer, if any, this season. Brazil’s soybean crop,
already diminished by a severe drought, is now likely to be
even smaller.

“They’re preventing fertilizers from getting to producing
countries,” said Antonio Galvan, the soybean association’s
president, criticizing international sanctions. “How many
millions are going starve to death because of the lack of
these fertilizers?”

Brazil sells most of its soybeans to China, which uses much
of the crop to feed livestock. Fewer, more expensive soybeans
could force ranchers to cut back on such animal feed, meaning
smaller cows, pigs and chickens — and higher prices for meat.

Jon Bakehouse, a corn and soybean farmer in Hastings, Iowa,
said he prepaid for fertilizer late last year because he
worried about a looming shortage.

His fertilizer still has not arrived, and he now has less than
a month to apply it to his corn crop. Without it, he said,
his yields would be halved.

“You know when they show the cars jumping in slow motion
and the passengers inside are up in the air? That’s what it
feels like,” he said. “We’re all just kind of suspended in
the air, waiting for the car to land. Who knows if it’s going
to be a nice, gentle landing, or if it’s going to be a nosedive
into the ditch.”

https://www.nytimes.com/2022/03/20/world/americas/ukraine-war-global-food-crisis.html

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