The Black Sea region is critical for global food security for its role in supplying food, fertilizers, and energy. Russia and Ukraine are major exporters of wheat and maize. As per the UN FAO, Ukraine and Russia account for 30 percent of the global wheat supply whereas in the case of maize, they account for a 20 percent share in global markets.
Since the beginning of the war in Ukraine, the wheat supply has been affected adversely as the Ukrainian ports are closed for commercial shipping. Global food prices were already soaring even before the war. The wide-ranging economic sanctions on Russia, especially its banks, have impacted the availability of credit for traders. Meanwhile, the cost of insurance too has gone up substantially. These factors have come together and, approximately, 13.5 million tons of wheat is stuck in Ukraine and Russia.
The war in #Ukraine is already impacting millions of lives inside AND outside the country.
Food prices reached a new all-time high in February according to the @FAO Food Price Index.
The collateral damage? Catastrophic global hunger 👇🎦 pic.twitter.com/ZVgqNH2O7B
— WFP Africa (@WFP_Africa) April 30, 2022
A similar situation had arisen in 1914-15. While fighting in the First World War, the Ottoman Empire had closed the Dardanelles Strait and the Black Sea became inaccessible. The consequent loss of access caused the wheat prices at the Chicago Board of Trade to rise by 45 percent.
In addition to the rise in food prices, due to the high demand, global oil and gas prices have been rising as well. Russia is a major oil and gas supplier and since the beginning of the Russia-Ukraine war, oil prices have surged above the US $ 100 per barrel.
It is estimated that oil prices will remain above $ 100 per barrel as long as the war in Ukraine continues. As the full effects of sanctions are beginning to take their toll on the Russian energy sector, oil prices are likely to go up even further.
The delays in finalizing and signing the Iran nuclear deal and the inability of the US, so far, to get its allies in West Asia to increase oil production to offset the likely impact of diminishing Russian energy exports have exacerbated the situation in the already unstable oil and gas markets. The impact of high oil prices will be felt in the transportation sector, which plays an important role in global food security.
Besides, fertilizer prices are at an all-time high level as the prices of raw materials required for fertilizer production are up 30% since the beginning of this year. Russia accounts for 14 percent of global fertilizer supplies and is a major exporter of nitrogen, potassic, and phosphorus fertilizers.
The war has resulted in a massive and deteriorating food security challenge in Ukraine, with a potential of far-reaching detrimental impacts beyond.@FAO is staying and delivering lifesaving assistance to the most vulnerable farming households.https://t.co/7f8I9XXYF4 pic.twitter.com/kMg216kK4N
— FAO in Emergencies (@FAOemergencies) April 28, 2022
Gas is a key input for fertilizers and the high gas prices have contributed to the price rise in fertilizer markets. Meanwhile, as the war drags on, countries are resorting to the tried and tested method of export bans and are stockpiling wheat to minimize the impact on domestic consumers. For example, Russia has banned the export of wheat whereas Indonesia has banned palm oil exports. China has been stockpiling wheat and has lifted restrictions on food imports from Russia. Meanwhile, as per the World Bank, the commodity prices will remain high till at least 2024.
As a result, global food security is under severe pressure. The African and West Asian countries that depend on food imports from the Black Sea region are worst affected. Egypt has raised the price of bread for the first time since 1988. In addition to the disruptions in supplies, the Horn of Africa is experiencing the worst drought since 1981 and needs as much support from the international community as possible.
The plight of people trapped in conflict-ridden Yemen and Taliban-controlled Afghanistan is too well-known to be recounted here. In India’s neighbourhood, Sri Lanka’s economic woes have been worsened by the higher food and energy prices since February and for similar reasons, Pakistan and Nepal are staring at economic crises.
India is considering wheat exports to African countries such as Egypt and Sudan. However, the heatwave in North India in the months of February and March has affected wheat production. The rising inflation and the imperatives of domestic food security programmes will have to be factored in by India if it seeks to ameliorate the food insecurity situation of its partner countries seeking its assistance.
Food security is intimately linked to political stability and therefore, the political impact of global food insecurity will be felt across the world to a varying degree. Experts have linked the high food prices in the late 2000s with the onset of the Arab Spring in 2010-11.
The food crisis and the rising energy prices along with the looming debt crisis in some countries have already jeopardized the economic recovery. Therefore, the global effects of the Russia-Ukraine war will be much more devastating. The countries across the world have no option but to brace for the impact as the new phase of the war unfolds in Eastern Ukraine.
Also Read: India's Wheat exports soar amid Russia-Ukraine conflict
( Sankalp Gurjar is a strategic analyst based in Delhi. This is an edited version of the original article by the author that appeared on the Indian Council of World Affairs website. Read the original article here. Views expressed are personal.)