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Why is the Ukraine war causing a worldwide food crisis and can anything be done?

According to the head of the United Nations, there is a global food crisis due to Russia’s invasion in Ukraine.

Inflation is on the rise, fueled by higher energy prices and the West’s withdrawal from Russian oil and gas supplies. This has led to rising food prices that have caused fears that many of the poorest people in the world will not be able to afford to eat .

The G7 finance ministers met on Thursday to discuss the immediate consequences of Vladimir Putin’s war against Ukraine as well as the COVID-19 pandemic that is causing price rises.

On Wednesday, officials from the US and the World Bank devised a multibillion dollar plan to counter the dangers.

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What is causing this situation to be so dire?


Food

This problem is caused by the fact that Russia, Ukraine and other countries are major exporters of many of the most important staple foods in the world.

Learn more about Food

According to the UN Conference on Trade and Development, 53% of global sunflower oil and seed trade is done by them together, and 27% of all wheat trade.

Ukraine currently has large quantities of wheat stored in its storage, but it cannot export because of the war.

Satellite photos show that Russians are blocking ships from going to the Black Sea ports that are vital for exports.

Sky News was told by Louise Jones of McKenzie Intelligence that “Odesa (and Mykolaiv) are two of the most important grain exporting ports.”

“Mykolaiv can be found on the Dnipro River. Satellite imagery clearly shows that the Russians have placed a series of barges along the river mouth. This effectively blocks it off. You can also see a Russian Corvette lurking nearby.

“Odesa isn’t blocked off like Mykolaiv. But we know they have been laying minefields. The problem with minefields is the Russians who laid them don’t know where they are.

“Then you have the Black Sea fleet which is reactive. Although it doesn’t have the flagship, it still has frigates and corvettes. It’s difficult to ignore.”

She stated that she was unaware that Russia had threatened any shipping companies with direct action, but that they could not take the risk of trying to load food exports onto ships.

“You must have very solid assurances before you take on an expensive ship past these guns .

“We do a lot for the insurance industry, keeping an ear on marine assets. They’re saying… they’ll pick them up after the war.

Russia is not under a blockade but is still subject to Western sanctions that could affect its ability to trade internationally.


Why is wheat and sunflower oil important?

Although rice is the main source of energy in the developing world, many people in the developed world eat a lot of oil and wheat.

According to World Atlas, wheat is estimated to provide 15% of the world’s calories. Vegetable oil, of which sunflower oil, provides another 10% of the energy that humans consume.

The demand is unlikely to decrease, so prices will rise when huge suppliers like Russia and Ukraine are unable export as much.

Other major producers have taken defensive measures to fuel the flame, including India banning wheat exports Saturday partly because of a scorching heatwave that has reduced production, and Indonesia, world’s largest palm oil exporter, stopping exports of crude palm oils (CPO), and some derivatives in late April to try to control domestic prices.

In France, extreme dry weather has led to severe damage to grain crops in certain parts. The country is experiencing record May temperatures, which are crucial for winter crop development.

Experts predict that heavy rain is needed in June to enable large-producing regions of the largest European Union grain producer to make it through.


What have been the effects on global prices?

Since the invasion of Ukraine on February 24, 2015, wheat prices have risen dramatically.

The cost of one bushel of wheat on Chicago Board of Trade (CBOT), which is a global benchmark for wheat prices, has reached new heights in March and the week since.

The war has made it clear that the Ukraine situation is unlikely to improve. Many areas are either under Russian occupation, or have been hit hard by large numbers of Ukrainians, some of whom may have been farmers, who are occupied with defending what they consider an aggressor.

The International Grains Council reduced its 2022/2023 wheat production forecast to 769 M tonnes, down from 780 Million.

In the meantime, vegetable oil prices also rose.

According to the International Food Policy Research Institute, vegetable oil prices were high before the invasion, just like many other commodities. However, vegetable oil prices have increased by an average of 30% since then.


Who will be most affected?

Although Ukraine exports large amounts of grain to other countries, its main customers are Asia and Africa.

According to UNCTAD, 25 African countries (including many of the least developed) import more than one-third of their wheat from war-torn countries.

The share of 15 of them is more than half.

The World Food Programme, which provides food for some 125 million people around the world, also purchases 50% of its grain from Ukraine.

This prompted UN food chief David Beasley, the UN Food Chief, to appeal to Russian President Vladimir Putin directly on Wednesday. He said: “If there is any heart at all, please let [Ukraine]’s] ports open.”

He stated that failure to open ports would be a declaration war on global food security. This could lead to famine, destabilisation of countries and mass migration due to necessity.

He added, “This isn’t just about Ukraine.” “This is about those who are at the edge of starvation right now around the globe. Please open these ports… so we can feed the most vulnerable and prevent famine. This is what we have done in the past when countries in this room came together.


Fertiliser

However, the threat to global food supplies is not limited to problems with Russian and Ukrainian wheat supplies.

The cost of fertiliser required to grow a wide range of crops worldwide has been affected by rising energy prices. Because fertiliser manufacturing is extremely energy-intensive, this is why it is so important to have a backup plan.

Russia and Belarus, which have backed Moscow’s intervention in Ukraine and are also subject to sanctions, account for more than 40% of all global exports of crop nutrient potassiumash.

This graph shows how fertiliser prices have changed despite being quite localised. It illustrates the impact of this graph which shows the price for a specific type of nitrogen-based fertilizer sold in Middle Eastern countries.

Further spiralling effects are likely to follow Russia’s invasion and sanctions against Vladimir Putin’s regime.

One thing that is certain is that it will push up food and energy prices as well as the price of all goods is the effect on global freight. This is because worldwide freight is entirely dependent on fuel.


What could be the consequences?

The shock of rising food costs has left many people all over the globe reeling. The IMF already predicts that there will be unrest.

There are indications that rising energy prices are having an impact – the violence in Sri Lanka is partly due to fuel price increases.

Inflation reached 29.8% in April. Food prices increased 46.6% annually.

Reports have emerged in recent days that Iran has been experiencing unrest amid rising food prices.

UNCTAD raised the risk of unrest in a March report that looked at how similar food price shocks have coincided with unrest over the past decade.

According to a report, “Long-term effects of rising food costs are difficult to predict.” However, UNCTAD’s analysis of historical data revealed some worrying trends. It pointed out that food commodity cycles coincide with major political events such as the 2007-2008 food rebellions and the 2011 Arab Spring.


What is the UK like?

It is difficult to assess the impact on the UK, as the UK doesn’t rely on Russia or Ukraine for its wheat supplies.

According to the industry body, although the import amount from each country is different from year to year. However, UK flour millers mainly import German, French and US wheat.

However, this doesn’t mean that the UK is immune.

Alex Waugh, director at UK Flour Millers stated in March that the sharp rise in market prices was due to earlier increases in price because of poor harvests in 2021. They will eventually feed through increased consumer prices for a variety of foodstuffs which depend on grain as a key ingredient. These include bread, but also a variety of other foods like eggs and meat.


What can we do about it?

On Wednesday, UN Secretary General Antonio Guterres stated that he is in “intense contacts” with Russia and Ukraine in order to restore Ukrainian grain exports.

Guterres stated that he was hopeful of an agreement to end the crisis. Russia would allow grain to be exported from Ukrainian ports, and Russian fertiliser and food would have unlimited access to the global markets.

He also said that there is still much to be done at a ministerial gathering.

According to IKAR, Russia could export more wheat this season because of a large harvest and stockpile. This further raises hopes.

However, the prospects of a breakthrough were shattered on Thursday by Russia. Moscow claimed that sanctions must be reviewed in order to allow Ukraine grain exports to be open to them. This is not possible considering Western resolve.

Interfax quoted Andrei Rudenko, Russian Deputy Foreign Minister, as saying that he appealed to Russia but also looked deeply at the complex of causes that led to the current crisis. In the first instance, those are sanctions that were imposed on Russia by the US or the EU, which interfere with normal free-trade.

Sky News’ Louise Jones stated that the Ukraine and NATO are unlikely to break the blockade, even though they have advanced weapons.

She stated that this would be an open confrontation between Russia and NATO, which she believes NATO has avoided.

“The Ukrainian navy does not have that position.

“UN-brokered is the only way out at this stage. Putin would have to be persuaded that Russians transporting grain ships out of Russia to feed the world is a good PR move. We are essentially waiting for the goodwill of Putin.

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