UKRAINE AND GLOBAL FOOD SECURITY

1.Why in news?

War, rain and economic hardship have depressed Ukraine’s wheat plantings, depriving the nation of vital export earnings in 2023 and heralding another year of tight global supplies and potentially high prices for basic foodstuff.

2.Key Takeaways

• Ukraine is one of the world’s top wheat exporters with key buyers including Egypt, Tunisia, Morocco, Indonesia, Pakistan and Bangladesh, and a further drop in production will leave many scrambling to find alternative supplies
• The race to secure grain is likely to drive up global prices, even hitting importers who don’t buy directly from Ukraine
• Ukraine harvested around 19 million tonnes of wheat this year, down more than 40 per cent from the previous season’s record of 33 million tonnes and a further sharp drop in production looks inevitable in 2023
• In a further blow to production prospects, cash-strapped farmers in Ukraine are also reducing use of vital crop inputs such as fertilisers, Less fertiliser means lower yields for the farmers that do plant
• The drop in production will affect some of the world’s poorest countries
• Ukraine exports some wheat to Turkey where it may be processed into flour and shipped to Africa, particularly sub-Saharan Africa, and also into soft wheat-based pasta which is popular among consumers in developing countries owing to more affordable prices compared to the pasta made from durum
• The Agricultural Market Information System (AMIS), which was set up by G20 members to strengthen global food security, has warned another poor crop in Ukraine would mean global stocks would not recover for at least another year, ensuring prices remain high and markets volatile
• The food crisis also coincides with continued economic fallout from the COVID-19 pandemic, climate shocks and high energy prices
• In contrast, prices the farmers receive in Ukraine remain very low due to the difficulty and high cost of moving crops across the war-torn country to export hubs

3.Lower export earnings

• A sharp drop in production is also likely to mean Ukraine’s wheat export revenues fall far below the roughly $4 billion in the 2021/22 season, according to Reuters calculations
• Farmers had sown 3.6 million hectares of winter wheat, as of Nov. 7, down 41 per cent from 6.09 million at the same stage a year ago, government data shows
• Ukraine sowed around 6.1 million hectares of winter wheat for the 2022 harvest, but a large area has been occupied by Russian forces since they invaded Ukraine in February and only 4.6 million hectares were harvested

4.Spring oilseeds 

• Ukraine is expected to see similar shifts in the upcoming spring planting season, with corn the main grain crop sown and sunflowers the main oilseed
• The agreement allows for agricultural products to be exported from three Ukrainian ports and there are hopes that it will be extended despite some reservations from Russia about how the pact is working
• Without it prices within Ukraine are likely to fall further, particularly in eastern and central Ukraine as it will only be possible to export through land routes which run from western Ukraine into the European Union