Taras Vysotskyi, Forbes, 18/04/2022
Two months of Russia’s war on Ukraine have already caused tens of thousands of deaths among the military and civilians, ruined cities and lives of millions of Ukrainians. But Ukrainians are not the only nation that will feel the impact of this war. And not only Russians will feel it due to the pressure of thousands of sanctions imposed by the international community as a sign of solidarity with Ukraine.
The pernicious consequences of Russia’s aggression are already palpable for the world’s economy, but these consequences will actually be catastrophic in certain respects for several regions of the world. According to António Guterres, UN Secretary-General, the war in Ukraine threatens hunger and poverty for 1.7 billion people worldwide, which is 20% of the world’s population.
Impact of the Russian Aggression on the Ukrainian Agricultural Sector
Russia’s war against Ukraine disrupted the usual functioning of the world food market because these two countries together account for 30% of world exports of wheat and barley, 18% of corn, and about 80% of oil and oil meal. In 2021, Ukraine supplied agricultural products to more than 180 countries and primarily to EU countries — almost 30%. The agricultural sector is also the key sector in Ukraine as it represents 41% of the commodity sector, where 19% of all workers are employed.
For the time being, more than 30% of the country’s territories are either unsafe for production or occupied. Part of the agricultural lands is damaged and mined, and the agricultural infrastructure, warehouses, transport and energy industries are damaged. Seaports are blocked, and logistics and economic connections are broken. Ukrainian farmers experience an acute shortage of fuel, seeds, fertilizers, plant protection products, spare parts, etc. Workers of our agricultural enterprises are involved in the Armed Forces of Ukraine, territorial defence and volunteering. All these factors have resulted in a critical decline in production for both Ukraine and the world.
Why Is It Important for the World?
Regions of the world that are most dependent on Ukrainian products include countries in Africa and the Middle East. Supplies of Ukrainian wheat account for more than 10% of annual wheat consumption in 15 countries. For example, it is 28% of Indonesia’s needs, 21% of Bangladesh’s needs, and Egypt imports almost 80% of its wheat from Russia and Ukraine.
The war in Europe has already affected about 25% of the world cereal trade and has caused an increase in world prices, food inflation and reduced access to food in the countries importing food from Ukraine and Russia. In particular, those are wheat and sunflower oil.
Ukraine provides food to more than 400 million people around the world; today’s world prices for agricultural products prove that the consequences of Russia’s war against Ukraine will eventually affect almost everyone.
How Will Ukraine and Its International Partners Get Out of the Export Crisis?
Ukrainian forecasts of agricultural exports in 2022 will be much more modest due to the Russian aggression, compared to the 2021 exports. Last year, the Ukrainian exports were $27.7 billion, whilst the forecast for this year is only $15.1 billion. This temporary breakdown alone in the usual food exports from Ukraine is equivalent to the loss of 4% of wheat, 9% of corn and almost 30% of sunflower oil exports worldwide.
Water transport, in particular sea transport, was essential for the exports as it shipped about 90% of agricultural products from Ukraine. Currently, Ukraine’s seaports are blocked, and so are the exports. Land transits via Belarus and Russia are also blocked. All current flows are so far supported by EU countries, or by transit via them to other ports.
With the support of the Ukrainian Government, businesses, and partner countries, we are now actively working on the logistics to ensure stable export routes and customs clearance of goods along with goods inspections. Also, the Ukrainian Government has recently established the Coordinating Council for Agricultural Logistics to monitor and facilitate the solution of logistics issues to ensure that Ukrainian businesses fulfil all of their possible contractual export obligations.
Also, the Ukrainian Ministry of Agricultural Policy and Food is negotiating financial assistance for Ukrainian farmers with European partners. A number of EU member states have responded to our needs: Poland is speeding up border procedures and transporting Ukrainian products, the G7 fully supports the creation of new supply chains by Ukraine, and Austria has recently removed restrictions for Ukrainian carriers – so that Ukrainian freight transportation through Austria is now possible without any permits, which, along with the restrictions previously removed by Slovakia and Italy, enables Ukraine to supply our agricultural products to Italy and Italian seaports without hindrance.
All border countries responded to the problem of grain exports from Ukraine to third countries and either has significantly simplified the procedures for processing cargo transportation or are actively working on that. In particular, liberal conditions for Ukrainian carriers were implemented by Romania, Slovakia, Hungary, Lithuania, Latvia, Estonia, as well as Italy, Turkey, Bulgaria, Georgia, Denmark, Greece and recently Austria.
Ukraine highly appreciates any support of the international community, businesses, volunteers and everyone who stands with us at this time. In this context, our Government and our people are doing all they can to reduce the negative impact of the war against Ukraine on the world in terms of food and to remain a guarantor of food security for the world.