Post by Deleted on Apr 3, 2022 16:40:17 GMT -5
Even now, most people fail to recognize the dire consequences of Russia’s attack on Ukraine. The impact goes far beyond the battlefields of Eastern Europe, effecting every nation on the planet. The war in Ukraine has transformed a situation where global food supplies were tight into an unavoidable global food crisis. Why? Below is a list of six reasons 2022/2023 will be an absolute disaster for the global food supply.
1) Sanctions – The sanctions the U.S. and its allies put in place to punish Russia will have serious consequences for the global food market. Russia produces far more than oil. It’s also the earth’s largest wheat exporter, accounting for 18% of global sales. And fossil fuels also play a major role in food production. Diesel fuel powers farm equipment as well as the trucks that bring food to market, and natural gas is a critical component in the production of fertilizer. In short, the sanctions placed on Russia will strain global supply chains and increase the price of agricultural commodities wherever they are grown.
2) Poor Harvests – The sanctions kick in at a time when global food supplies are already tight. Now, extreme drought threatens to destroy the winter wheat crop in Kansas, Oklahoma, and Texas. Half of U.S. wheat production is hard red winter wheat. A reduced crop will put further pressure on food prices.
Unfortunately, the U.S. isn’t alone. China’s Minister of Agriculture and Rural Affairs, Tang Renjian, cited heavy rainfall last year for delaying the planting of around one-third of China’s normal wheat acreage. According to Tang, “a survey of the winter wheat crop taken before the start of winter found the amount of first- and second-grade crop was down more than 20 percentage points.”
In addition to droughts and poor harvests, a bird flu outbreak is threatening poultry production on a global scale. Because of an outbreak in Israel, “authorities estimate about 600,000 hens may need to be destroyed to contain the virus.” In the United States, the bird flu outbreak “has already resulted in the deaths of almost 2.8 million birds” (most of them chickens or turkeys). This has a direct impact on the supply of eggs, chicken, and turkey – driving up food prices and creating product shortages.
3) The Ukrainian Harvest – With Ukraine under siege, how many farmers do you think are planting their fields? Not many. Even if they do manage to plant and harvest, how will their produce get to market? The invasion devastated roads and infrastructure throughout the country. This will have a dramatic impact on global food supply. Ukraine is the world’s 5th largest wheat exporter, accounting for 7% of global sales in 2019. 71% of Ukraine’s land is agricultural. For centuries, they’ve been known as “the breadbasket of Europe,” and some countries are wholly dependent on Ukraine for food supplies.
4) Black Sea Shipping – Because of the war, Black Sea shipping is almost non-existent. Insurance rates for ships entering the Black Sea are sky high. Even if they wanted to get into the area, it’s simply not economical for ships to do business in the Black Sea. These empty shipping lanes translate into dire consequences for the world. Together, Russia and Ukraine account for 25% of global wheat sales. Moreover, around “one-fifth of the corn trade and 12% of all calories traded globally come from Ukraine and Russia.” All that food can’t make it to the rest of world. War and sanctions have brought regional food exports to a screeching halt.
5) Food Protectionism – Even if the Black Sea re-opens tomorrow, the food exports aren’t coming. Why? Because the war has caused a cascade of nations to ban food exports in the name of domestic food security. For this very reason, Ukraine banned all agricultural exports. Russia also banned exports. According to Interfax, “Russia’s Agriculture Ministry said the country could ban wheat, rye, barley and corn exports from March 15 to June 30.”
Meanwhile, Argentina (the world’s top exporter of processed soy products) suspended soybean meal and oil exports. Along with Ukraine and Russia, Argentina is part of a growing list of countries banning exports of agricultural goods. Others include Moldova, Hungary, Serbia, Algeria, Indonesia, Turkey, and others.
6) The Fertilizer Shortage – As mentioned previously, you can’t make fertilizer without urea and natural gas. Russia is the world’s top exporter of both. Not surprisingly, Russia is also the world’s #1 exporter of fertilizer. On March 10, Russia announced the suspension of fertilizer exports. Think about the implications of that. At a time when global food prices are already at all-time highs, when Ukraine’s massive grain production might be lost for the year, and when global supply chains are in a state of chaos, the world’s top fertilizer exporter won’t be supplying fertilizer. I don’t think the world fully understands the implications yet.
1) Sanctions – The sanctions the U.S. and its allies put in place to punish Russia will have serious consequences for the global food market. Russia produces far more than oil. It’s also the earth’s largest wheat exporter, accounting for 18% of global sales. And fossil fuels also play a major role in food production. Diesel fuel powers farm equipment as well as the trucks that bring food to market, and natural gas is a critical component in the production of fertilizer. In short, the sanctions placed on Russia will strain global supply chains and increase the price of agricultural commodities wherever they are grown.
2) Poor Harvests – The sanctions kick in at a time when global food supplies are already tight. Now, extreme drought threatens to destroy the winter wheat crop in Kansas, Oklahoma, and Texas. Half of U.S. wheat production is hard red winter wheat. A reduced crop will put further pressure on food prices.
Unfortunately, the U.S. isn’t alone. China’s Minister of Agriculture and Rural Affairs, Tang Renjian, cited heavy rainfall last year for delaying the planting of around one-third of China’s normal wheat acreage. According to Tang, “a survey of the winter wheat crop taken before the start of winter found the amount of first- and second-grade crop was down more than 20 percentage points.”
In addition to droughts and poor harvests, a bird flu outbreak is threatening poultry production on a global scale. Because of an outbreak in Israel, “authorities estimate about 600,000 hens may need to be destroyed to contain the virus.” In the United States, the bird flu outbreak “has already resulted in the deaths of almost 2.8 million birds” (most of them chickens or turkeys). This has a direct impact on the supply of eggs, chicken, and turkey – driving up food prices and creating product shortages.
3) The Ukrainian Harvest – With Ukraine under siege, how many farmers do you think are planting their fields? Not many. Even if they do manage to plant and harvest, how will their produce get to market? The invasion devastated roads and infrastructure throughout the country. This will have a dramatic impact on global food supply. Ukraine is the world’s 5th largest wheat exporter, accounting for 7% of global sales in 2019. 71% of Ukraine’s land is agricultural. For centuries, they’ve been known as “the breadbasket of Europe,” and some countries are wholly dependent on Ukraine for food supplies.
4) Black Sea Shipping – Because of the war, Black Sea shipping is almost non-existent. Insurance rates for ships entering the Black Sea are sky high. Even if they wanted to get into the area, it’s simply not economical for ships to do business in the Black Sea. These empty shipping lanes translate into dire consequences for the world. Together, Russia and Ukraine account for 25% of global wheat sales. Moreover, around “one-fifth of the corn trade and 12% of all calories traded globally come from Ukraine and Russia.” All that food can’t make it to the rest of world. War and sanctions have brought regional food exports to a screeching halt.
5) Food Protectionism – Even if the Black Sea re-opens tomorrow, the food exports aren’t coming. Why? Because the war has caused a cascade of nations to ban food exports in the name of domestic food security. For this very reason, Ukraine banned all agricultural exports. Russia also banned exports. According to Interfax, “Russia’s Agriculture Ministry said the country could ban wheat, rye, barley and corn exports from March 15 to June 30.”
Meanwhile, Argentina (the world’s top exporter of processed soy products) suspended soybean meal and oil exports. Along with Ukraine and Russia, Argentina is part of a growing list of countries banning exports of agricultural goods. Others include Moldova, Hungary, Serbia, Algeria, Indonesia, Turkey, and others.
6) The Fertilizer Shortage – As mentioned previously, you can’t make fertilizer without urea and natural gas. Russia is the world’s top exporter of both. Not surprisingly, Russia is also the world’s #1 exporter of fertilizer. On March 10, Russia announced the suspension of fertilizer exports. Think about the implications of that. At a time when global food prices are already at all-time highs, when Ukraine’s massive grain production might be lost for the year, and when global supply chains are in a state of chaos, the world’s top fertilizer exporter won’t be supplying fertilizer. I don’t think the world fully understands the implications yet.