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Monday, April 15, 2024

The War in Ukraine Is Threatening the Breadbasket of Europe

The relentless shelling of Ukraine is obscuring a shadow crisis created by the war: long-term damage to the global food system that seems likely to increase hunger, disrupt markets, change land and water use, and possibly even release more carbon into the atmosphere.

Russia and Ukraine are Europe’s breadbasket; the International Food Policy Research Institute estimates that their exports represent 12 percent of all the food calories traded in the world. The two countries account for almost 30 percent of global wheat exports, almost 20 percent of corn exports, and more than 80 percent of the world supply of sunflower oil. Those exports are stalled for different reasons—in Ukraine by Russia’s invasion, and in Russia by global sanctions—but the net effect is the same. It’s as if Iowa and Illinois, the heart of US grain production, were ripped off the map.

Early signs of that damage appeared this week. The first monthly assessment of world food crops published by the US Department of Agriculture since the war began projected that Russian and Ukrainian wheat exports would fall by at least 7 million metric tons this year. Simultaneously, the Ukrainian cabinet voted to ban all wheat exports, along with shipments of oats, millet, buckwheat, and cattle—keeping their products at home for their own people’s needs.

“This crisis is beyond the normal ability to shuffle supplies around,” says Scott Irwin, an agricultural economist and professor in the College of Agricultural, Consumer and Environmental Sciences at the University of Illinois at Urbana-Champaign. “We’ve exploded that system, and the cost is going to be extreme economic pain.”

The crop crisis in Ukraine has several components. Goods that have already been harvested—last autumn’s corn, for instance—can’t be transported out of the country; ports and shipping routes are closed down, and international trading companies have ceased operations for safety. (Plus, while those crops sit in bins, destruction of the country’s power grid takes out the temperature controls and ventilation that keep them from spoiling.) This year’s wheat, which will be ready in July, can’t be harvested if there’s no fuel for combines and no labor to run them. Farmers are struggling over whether to plant for next season—if they can even obtain seeds and fertilizer, for which supplies look uncertain. (Russia is the world’s biggest exporter of fertilizers; it suspended shipments last week.)

Global food prices spiked to an all-time high before the war even began, thanks to the pressure that the Covid pandemic put on supply chains, and wheat prices are now at a 14-year peak. Analysts worry that the countries that buy the most wheat from Ukraine—predominantly in Africa and the Middle East—will have the hardest time paying as prices rise.

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“Not only do those countries receive a large fraction of their wheat from Ukraine and Russia, 80 percent in some cases, but the bulk of diets in those places is bread,” says Megan Konar, a water and food policy researcher and associate professor of civil and environmental engineering at the University of Illinois. Egypt and Turkey source most of their wheat from the Black Sea region, she points out, and Bangladesh, Pakistan, and a number of sub-Saharan countries buy at least half of their wheat from Ukraine.

It’s worth remembering that the last time food prices were this high—in 2008 and 2009—it caused civil unrest all over the world. There were riots in Haiti, South America, and South Asia. The price of bread was one spark for the Arab Spring, which began in 2010. Experts worry similar unrest might lurk in the near future as poor countries get outbid for grain by richer ones. “We’re already seeing some increase in prices because of the conflict, in addition to the increase in prices we experienced during Covid because of disruptions to the supply chain,” says Olena Sambucci, an agricultural economist and project scientist at UC Davis. Keeping supplies flowing, she says, “will depend on whether governments of the countries that are recipients of those exports are going to be able to organize substitute imports from somewhere else, and that will involve higher prices. Affordability will be a problem.”

To make all this worse, the United Nations’ World Food Programme, probably the largest distributor of food aid to struggling economies, buys more than half of the grain it distributes from Ukraine and Russia. The agency is already paying 30 percent more for food than it did a few years ago, its executive director wrote Monday in The Washington Post: “The impact of a Ukraine gutted by the firestorm of war will be felt globally for years to come.”

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One suggestion for staving off a food crisis, advanced by Irwin on Twitter last week, would be to release land temporarily from the US Conservation Reserve Program, a complex system of set-asides in which farmers are paid to remove acreage from production for 10 years at a time, and instead plant grasses or trees to create wildlife habitat, prevent erosion, and protect water quality. There are about 22 million acres in the program right now—not all in one place, but scattered across the country.

But the idea of using this land to grow wheat just for 2022 is deeply controversial. Farmers and USDA personnel have argued that some of these areas are already in drought, or marginal to begin with, or couldn’t be reverted to acreage quickly enough to make a difference, or that valuable biodiversity and carbon capture would be lost—and, not coincidentally, that increasing the availability of wheat might make prices go down.

Former USDA chief economist Joe Glauber, now with the International Food Policy Research Institute, wrote on Twitter: “Any changes in CRP would likely have small impacts on global supplies at least for 2022 wheat. And there are a lot of environmental arguments for maintaining fragile lands in CRP.”

It’s entirely possible, Irwin said this week, that US farmers can't move nimbly enough to get reserved acreage back to producing wheat right now, or get the fertilizers and pesticides they would need to do so. But it’s worth exploring, he says, to alleviate what he calls “the biggest supply shock to global grain markets in my lifetime.”

“Farmers are producers,” Irwin says. “If they’re given the access, they’ll plant.”


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