Page 63 - bne magazine July 2022_20220704

bne July 2022 Eastern Europe I 63
Ukraine’s budget is underfunded and in need of Western help
Ben Aris in Berlin
New research from the University of the Potomac shows that
the food favoured in different countries does not necessarily correspond with what is produced locally. A taste for foreign crops was enabled by thirty years of globalisation and increasingly advanced agricultural and transportation technology. Now, this interdependency risks exacerbating food shortages around the world as the war in Ukraine imperils food security.
Wheat is one of the most striking examples. Wheat originated in Central and West Asia and the Mediterranean. Now it is consumed worldwide, and ranks as the most produced agricultural commodity for 14 countries. Wheat is
a particularly significant crop right now, because the war in Ukraine is disrupting outflows of wheat from
two of the world’s biggest exporters – Ukraine and Russia.
The root of the problem
Russia is the world’s third-biggest wheat producer. Russia and Ukraine together comprise one of the world’s crucial breadbasket regions, accounting for around 30% of the global wheat trade.
A Russian blockade of the Black Sea is preventing some Ukrainian wheat from reaching the market, and satellite photos appear to show Russian ships stealing Ukrainian grain. The effects are already being felt. Wheat prices jumped by 20% in March alone, and are now up 53% since the start of the year.
Wheat is an essential raw material for the processed food industry, so the increase in wheat prices is likely to have a knock- on effect on the prices of other foods, too.
Africa is particularly dependent on Ukraine and Russia for its wheat
supplies. About 42% of the continent’s wheat imports came from Ukraine and Russia between 2018-20, according
to The Conversation. Wheat prices in Africa are already up 60% since the start of the war. The poorest areas will be hardest hit by the rising prices.
The scale of the looming crisis is enormous. Around 25m tonnes of corn and wheat is currently in storage in Ukraine. That’s the equivalent of the annual consumption of all of the world’s least developed economies.
The crisis isn’t limited to wheat either. A programme of modernisation of Russian agriculture over the past two decades has made it a significant producer – feeding 2bn people worldwide. Russia
is the world’s biggest producer of barley and sugar beet, producing almost 15% of the global supply of both crops.
Ukraine’s fertile fields have turned it into a big agricultural supplier too. Two-thirds of its arable land is used for agriculture.
The UN’s Food and Agriculture Organization (FAO) lists Ukraine as one of the world’s largest producers of wheat, corn, sunflower seeds, barley, sugar beet, potatoes and soybeans in 2020. The total value of these crops in Ukraine in 2020 was $21.4bn. It’s also the world’s third-largest producer of potatoes and pumpkins.
Ukraine is also the biggest producer of sunflower seeds, providing over a third of global supply. As a consequence, sunflower oil has risen in price by over 25% since the war started. Sunflower seeds and sunflower oil are an essential ingredient in many food production processes, and are among the most exported agricultural commodities.
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