With another round of oil price hikes this week, the public is clearly feeling the impact of Russia-Ukraine conflict on the global oil supply chain.
However, as early as the first few weeks of what Moscow calls special military operations, another global crisis has been brewing as a result of the conflict: global food supply.
According to the New York Times –
Ukraine and Russia are enormous producers of wheat, corn, barley, sunflower oil and fertilizer. One study calculated that the two countries accounted for 12 percent of the world’s calories.
With Ukraine under attack and Russia hit with strict sanctions, a huge supply of food is suddenly trapped — with Africa and the Middle East particularly imperiled.
In fact, since the start of the conflict, wheat prices have increased by 21 percent, barley by 33 percent and some fertilizers by 40 percent.
These are troubling statistics for our global food supply, because in comparison to global oil and gas supply, in which Russia only accounts for around 17 percent and 12 percent, respectively, Russia and Ukraine account for around 30 percent of the world’s wheat export.
Certainly, the 21 percent increase in wheat prices will not be ending anytime soon for as long as the conflict and sanctions continue.
More precisely, countries in the Middle East and Africa are severely affected by this supply crunch, but because the commodities market also follow global pricing, the impact is certainly felt around the world.
The Philippines should thus prepare for increases in the price of our pandesals and tasty breads, as a result of the ongoing conflict in Ukraine and Russian sanctions.
On the other hand, more concerning has been the increase in the price of fertilizers as a result of the Ukrainian conflict and Russian sanctions.
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This is where the problem lies for the world, even for countries which do not consume as much wheat and barley as Europe, Middle East and Africa.
The soaring prices of fertilizer as a result of the Ukraine-Russia conflict will certainly impact the capacity of rice-producing nations to maintain its current production levels at the same prices prior to the conflict. In fact, it also impacts corn and other crops which are essential for animal feed.
As a result of high prices, it can be expected that farmers will apply less fertilizer, triggering an entire food chain crisis, in which less fertilizer means lower-quality crops, and lower-quality crops mean less nutrition for cattle, hogs and chicken.
Correspondingly, this also means higher meat prices around the world, including the Philippines.
Even the promised lower prices of the rice tarrification law will not help control expected price increases in rice, as even rice-exporting nations such as Thailand and Vietnam will have to contend with higher fertilizer prices.
Worse, Filipino farmers will have to deal with higher fertilizer prices during planting season, in a backdrop of minimal government subsidy and limited irrigated areas.
Ultimately, the way forward to stop a global food crisis from further escalating is for the Ukraine conflict to end, and correspondingly, for the Russian sanctions to stop.
With both sides continuing to prosecute the conflict, a large chunk of global food supply is stuck within their borders, and global prices continue to accelerate as a result of the shortage.
The point needs to be made: the food security of the Philippines and the rest of the world should not be hostage to the ongoing crisis in Ukraine. The international community should move to ensure that global food prices stabilize in the soonest time to avoid dire scenarios particularly in poorer areas of the world.
The world should not be at the receiving end of the ongoing conflict between great powers.