Russia and Ukraine play significant roles when it comes to global food inputs and supplies. Both countries are major exporters of agricultural commodities especially wheat and corn and others like seed oils.
In 2019, Russia was the world’s biggest exporter of wheat ($8.14B) and nitrogenous fertilizers ($3.05B).
In 2019, Ukraine was the world’s biggest exporter of Seed Oils ($3.75B). The top five exports of Ukraine include corn ($4.77B), seed oils ($3.75B) and wheat ($3.11B).
The Russian invasion of Ukraine has been a major shock to the agricultural commodity industry. There has been an explosive increase in the price of agricultural commodities such as Maize, Wheat and Soybean which have increased by 21%, 35% and 20% respectively. Sunflower oil prices have also increased by 11%.
A rise in prices will be beneficial for grain and oilseed farmers, the surge in prices presents an opportunity for more financial gains. However, cost of input has gone high and actual production has been hit because of the current instability.
Rising commodity prices is bad news for consumers who have already experienced food price increases over the past two years. The most affected consumer bases are those in developing countries who depend largely on the importation of agricultural inputs and finished products.
There is still a lot of uncertainties about the geopolitical challenges that lie ahead. But for African countries there are reasons to be worried given their dependency for grains imports. Africa also imports a lot of inputs such as fertiliser, seed and crop protection, and the increasing prices and the scarcity that has hit the market means domestic production of food will be affected.
There is a projected challenge for production among other large grain producing countries owing to the high cost of inputs, the directive by countries such as China and Russia to control fertiliser exports and the surge in oil prices contributing to energy, transportation and processing costs.
Ultimately, the goal should be to deescalate the conflict. Russia and Ukraine are deeply embedded in the world’s agricultural and food markets. This is not only through supplies but also through agricultural inputs such as oil and fertiliser.
By: Enoch Afari Asante | AgriGold Magazine