How Russia-Ukraine war, China’s supply chain will make food the most expensive commodity ever
Russia has been relentless in its pursuit of Ukraine, but as the UN expressed its displeasure with Russia’ s decision to go to war, it also declared a total ban on all Russian imports. Food items up over Russia- Ukraine war. As a result of the Russia- Ukraine war, Ukraine missed its sowing season, resulting in the country’ s worst food crisis since World War II.
By Gurbaksh Chahal
Russia has been relentless in its pursuit of Ukraine, but as the UN expressed its displeasure with Russia’s decision to go to war, it also declared a total ban on all Russian imports.
Russia appears unconcerned about what would be considered one of the harshest economic consequences and sanctions a country could face, owing to the fact that it has been working on these plans for quite some time.
While most people thought Russia’s war was rash, given how long the country has remained at war, every move Russia has made appears to have been calculated and meticulously planned out over time.
As a major player in the global economy, Russia reacted by prohibiting wheat and agricultural fertilizer exports to all countries except its ally, Belarus.
Add to that China’s lockdown due to a Coronavirus outbreak, as well as China’s ban on food exports due to food scarcity, and you have a volatile global situation that shows no signs of abating. The cherry on top is a Chinese supply chain bottleneck, which should make you sit up and take notice.
The Russian Angle
As a result of the Russia-Ukraine war, Ukraine missed its sowing season, resulting in the country’s worst food crisis since World War II.
Russia and Ukraine account for approximately 30% of global traded wheat and 12% of world’s total combined calories each day.
The rejection of trade with the rest of the world is a gut punch, but it appears to be the type of tactic Putin wants to use to bring nations to the table for talks in Russia’s favor. His war has resulted in port blockages, preventing supply chains from reaching Ukraine, which has long been known as Europe’s breadbasket.
As a result of the war, many businesses have fled Russia and Belarus. Maersk, the Danish shipping conglomerate that owns roughly 17% of the world’s container ships and operates 75 ports and terminals in 42 countries, has announced plans to close its offices in Russia and Belarus, as well as to cease commercial operations and interactions, by the summer of this year. To make matters worse, Russia is the largest exporter of fertilizer materials, followed by China.
Russia, the world’s largest fertilizer exporter, accounts for:
40% of ammonium nitrate exports23% of global ammonia exports14% of urea exports21% of potash exports10% of complex phosphates.Russia controls 40% of the world’s potash trade with its ally, Belarus.
Since the beginning of 2022, Nitrogen, ammonia, phosphates, nitrates, urea, and sulphates have all increased 30% in price.
Primary markets for Russian fertilizers include Brazil, India, China, Estonia, the United States, Mexico, Finland, Romania, Poland, and Latvia. Even smaller countries with significantly lower import volumes, such as South Africa, will feel the heat and price pressure. Farmers have already stated that they will use less fertilizer this year, which will have global consequences such as higher inflation and lower food yields.
Rise in Food Prices
The (UN) Food and Agriculture Organization predicts food prices will rise by 20% as a result of the war and the Chinese lockdown. This is a significant increase that has the potential to worsen global food insecurity.
According to the World Food Program, 283 million people in 81 countries are facing a severe food shortage.
45 million people are on the verge of starvation. Food scarcity will disproportionately affect developing countries. India is one such example.
When the Ukraine war broke out, India was eager to export wheat to other countries for the first time in its history, but it fell short yesterday, as it began to impose an export ban on wheat exports due to a shortage caused by the Ukraine war and climate change, deepening and hastening the global food crisis.
Similarly, as “food composition” changes dynamically, other countries will begin to take similar “nationalized” paths
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