The war in Ukraine is threatening further disruption to already stretched supply chains. Ukraine and Russia may only account for a small proportion of the imports of major manufacturing nations like Germany and the US, but they are essential suppliers of raw materials and energy for many crucial supply chains.
Global food prices already rose sharply during 2021 due to everything from higher energy prices to climate change. Food producers are likely to come under further pressure as prices of key inputs rise now.
Russia and Ukraine together account for more than a quarter of global wheat exports, while Ukraine alone makes up almost half of exports of sunflower oil. Both are key commodities used in many food products. If harvesting and processing is hindered in a war-torn Ukraine, or exports are blocked, importers will struggle to replace supplies.
Some countries are particularly dependent on grain from Russia and Ukraine. For example, Turkiye and Egypt rely on them for almost 70% of their wheat imports. Ukraine is also the top supplier of corn to China.
Wheat prices (US$/bushel)
Stepping up production in other parts of the world could help to reduce the impact of interruptions to food supplies. However, Russia is also a main supplier of key ingredients for fertilisers, so trade sanctions could affect production elsewhere. Meanwhile, we can also expect diversions to trade flows: China has already said it will begin importing Russian wheat, for instance.
By Sarah Schiffling – Nikolaos Valantasis