1. Why is Ukraine so influential in world food markets?
The second largest country in Europe, Ukraine is covered in flat plains containing dark, rich soil ideal for farming. Cheap food from Ukraine helped shape the course of European history, feeding the populations of rapidly growing industrial cities in the 19th century and sustaining the vast Soviet Union through decades of isolation. Before the war, Ukraine exported more cereals than the whole of the European Union and supplied about half of the seeds and sunflower oil traded in the world. More than 30 net wheat importing countries depend on Russia and Ukraine for more than 30% of their wheat import needs.
2. How did the war affect exports?
They collapsed when Russian forces invaded in late February and imposed a blockade on the main Ukrainian export terminals in Odessa and Mykolaiv. At mid-year, at least 25 million tonnes of grain harvested in 2021 were still stuck in the country, just as a new wheat harvest was due to start. Some of the wheat, corn and barley was transported overland to Romania, Poland and Baltic Sea ports by roads, railways and barges on the Danube. These roads could only handle about a fifth of Ukraine’s pre-war exports, and efforts to increase volumes were hampered by a shortage of fuel for trucks and bottlenecks in transportation. Ukraine’s ex-Soviet railways use a wider gauge than their Western counterparts, resulting in border delays of up to 30 days. Cereal exports in June totaled only 1.4 million tonnes compared to around 5 million tonnes per month in a typical year.
3. Why is this important?
Falling deliveries from the fourth-largest grain exporter have pushed up prices and left import-dependent countries in Asia, Africa and the Middle East scrambling to find alternative supplies. The shortages were contributing to sporadic political unrest and 43 countries were at risk of famine, according to the United Nations World Food Programme. Ukraine has been one of the largest contributors to the WFP: Eritrea and Somalia depended almost entirely on Russia and Ukraine for their wheat supplies last year, while Tanzania, Namibia and Madagascar relied on them for more than 60% of their supplies, according to the UN. The data.
4. What is preventing Ukraine from resuming exports?
While the larger export terminals were largely intact and still under Ukrainian control, ports and coastal waters were riddled with mines. Ukraine has accused Russia of stealing grain shipments and selling the shipments as its own. Russia benefits from the blockade because it has deprived the Kyiv government of revenue to support the resistance, inflicted economic hardship on Moscow’s Western adversaries, and increased the value of its own wheat on the international market (Russia is still a wheat exporter). larger than Ukraine).
5. Can anything be done to resolve the dispute?
The UN held talks in July to try to break the deadlock and allow escorted convoys from Ukrainian Black Sea ports. An initial round of talks ended with a “glimmer of hope”, according to General Secretary Antonio Guterres, who said more work was needed to achieve a breakthrough. The Ukrainian government was wary of clearing the Black Sea which helps protect its ports, as Russian troops could then launch an assault on them. The Russian government has previously suggested it could allow ports to reopen if the United States and its allies ease sanctions on Moscow – an idea they are unlikely to accept.
6. What is the impact of the war on the next harvest?
The government expects this year’s harvest to be 40 percent lower than last year’s as farmland has been damaged or cut by the conflict. Farmers who are able to gather their crops may run out of space to store them, as silos are still loaded with last year’s grain. This lack of storage capacity, combined with a collapse in incomes that has left farmers with no money to buy seed, means it could take years for exports to fully recover.
More stories like this are available at bloomberg.com