Explained | The impact of the Ukraine-Russia crisis on global agricultural markets

Considering that war-related disruptions may persist, FAO has forecasted that Ukraine’s wheat export could decline by 50 per cent in 2022-23.

The story so far: Russia’s invasion of Ukraine has not only created instability in the region and displaced millions of people but has also led to a global food shortage. Earlier in June, the Food and Agriculture Organisation of the United Nations (FAO) released a report that outlines the importance of Ukraine and Russia for agricultural markets and the risks associated with the war that broke out in Ukraine in February 2022 when Russia invaded the country.

Both Russia and Ukraine are among the top producers of agricultural commodities in the world. In 2021, both ranked among the top three exporters of wheat, barley, maize, and sunflower seed and oil, globally.

People living in eastern Ukraine were already displaced or impacted by war since 2014 when Russia annexed Crimea. A countrywide war has pressured Ukraine’s agricultural production and limited its economic activity, thus further reducing the purchasing power of its people. Food insecurity and malnutrition are also on the rise. 

FAO projections suggest that if the war causes a prolonged impact on food exports by Russia and Ukraine, the number of undernourished people around the world can increase by 8-13 million in 2022-23. 

Russia shipped 32.9 million tonnes of wheat and meslin (in product weight) in 2021, making it the second-largest wheat exporter. Ukraine exported 20 million tonnes and ranked sixth. 

The war has disproportionately affected least developed countries (LDCs) and low-income food-deficit countries (LIFDCs) since a large number of countries that import food and fertilizers from Russia and Ukraine fall into these categories.

Eritrea, the African country on the UN list of LDCs, was one of the main buyers of wheat from Russia and Ukraine in 2021. Russia accounted for over 50 per cent of Eritrea’s wheat import while the rest of it came from Ukraine. Other LDCs that imported more than 50 per cent of their total wheat export from Russia include Rwanda, Congo, Madagascar, Senegal, Togo, and Burundi.