Is the Russia-Ukraine war leading to a global food crisis? – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/todays-paper/tp-others/tp-variety/is-the-russia-ukraine-war-leading-to-a-global-food-crisis/article65229052.ece

Food for thought India will be affected with prices of fertilisers and cooking oil set to surge sharply

Food for thought India will be affected with prices of fertilisers and cooking oil set to surge sharply

Food for thought India will be affected with prices of fertilisers and cooking oil set to surge sharply

Food for thought India will be affected with prices of fertilisers and cooking oil set to surge sharply

1/2

2/2

Food for thought India will be affected with prices of fertilisers and cooking oil set to surge sharply

Food for thought India will be affected with prices of fertilisers and cooking oil set to surge sharply

×

Is a global food crisis in the making on account

of Russia-Ukraine war?

Yes. The Russia-Ukraine conflict is leading the world to a potential food crisis. This comes amid global food prices surging to record levels in February. According to the Food and Agriculture Organization (FAO), soaring prices of food commodities are likely to expose several million people to hunger as supply of key staple crops such as wheat, corn and sunflower could be affected.

Prices of wheat, corn and cooking oils have all surged to record highs after the war broke out. Besides, crude oil prices ruling over $100 a barrel will lead to spike in the rates of farm inputs such as fertilisers.

Russia is the top wheat exporter and Ukraine is among the top five shippers in the global wheat market. A halt in supplies from these countries has resulted in wheat prices escalating.

Ukraine is a major supplier of corn — 17 per cent of global exports – and sunflower oil ( 60 per cent ). The suspension of operations at Port Odessa has resulted in the market panicking and prices soaring.

Since the war broke out on February 24, wheat prices have gained over 50 per cent, corn by 25 per cent, sunflower oil by over 35 per cent, and its alternative soyabean oil by 20 per cent.It is not just food but the supply of feed materials are also under threat.

Corn and barley prices have skyrocketed as Russia and Ukraine make up for 14 per cent of global barley shipments.

Why has this crisis fuelled food protectionism?

Various nations, in a bid to ensure that their citizens are not left hungry or are forced to pay high costs for food, are resorting to protectionism.

Hungary has banned export of grains, while Moldova, a small exporter, has suspended shipments of wheat, corn and sugar.

Argentina is ensuring wheat supplies to domestic millers and keeping pasta prices under control. Indonesia has increased supply of palm oil by domestic producers to 30 per cent from 20 per cent as cooking oil prices have soared.

Bulgaria, a large exporter, is working out a system to buy food grains to meet the needs of its citizens. Egypt, too, has banned exports of key agricultural products, including flour, lentils and wheat.

Russia itself has been taxing exports for some time now, while Ukraine has barred shipments of wheat, oats and key staples to ensure its citizens do not go without food. The protectionism will ensure that food produced for the domestic market is not exported in view of surging global prices.

Which are the countries that are likely to be impacted the most?

While least-developed countries, mainly in Africa and Asia, are likely to be affected the most, countries in West Asia will also be hit. The main reason is that countries in Africa and West Asia have been depending on Russia and Ukraine for supplies of wheat, corn and cooking oils. Both these nations are also logistically nearer, while their agricultural commodities are priced competitively.

Egypt, Iran, Turkey and Bangladesh depend on these two nations for 60 per cent of their wheat supplies, the FAO has said. Lebanon, Tunisia, Yemen, Libya and Pakistan are other nations depending on the erstwhile Soviet Union member nations for their food needs.

Besides, Russia is a key supplier of fertilisers. Its war with Ukraine and the sanctions against it have threatened to either make fertilisers costly for importing nations, thus raising farm input costs or stopping them altogether.

Will India be

affected, too?

Yes, India will be affected with prices of fertilisers and cooking oil set to surge sharply. At least 35 per cent of India’s fertilisers are imported. The Centre subsidises fertiliser costs, but may to have bear additional burden that is likely to be passed on to tax payers.

India meeting 80 per cent of its crude oil requirement through imports will result in higher fuel prices, including cooking gas. This will push up prices in general and fuel inflation further.

Cooking oil is another worry as halting sunflower oil exports from Ukraine, which accounts for 60 per cent of the total global exports, will lead to further hike in prices. Alternative sources are limited and the US Department of Agriculture last week said Argentine sunflower prices have increased 42 per cent since the war broke out.

Palm oil prices have increased as Indonesia is curtailing its exports and the edible oil is also being diverted for bio-diesel production in view of crude oil prices zooming.

Since there is a demand for exports of wheat and corn, domestic prices of these agricultural produce have increased. In fact, even before wheat can be harvested, its prices are ruling higher than the minimum support price (MSP) of Rs. 2,015 a quintal this year. Corn prices are also ruling near the MSP level of Rs. 1,870 a quintal. This will increase the costs for the poultry and starch sectors as the grain is a key raw material.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s