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A new food production and export war has begun

A new food production and export war has begun

The escalation of the Russia-Ukraine conflict has raised worries about global food security, and the longer the conflict lasts, the more the food market suffers.

According to analysts, the war will surely lead to the collapse of the whole industrial chain of food production, logistics, and distribution.

That is because both Ukraine and Russia’s wheat export amounts to a total of 28 percent of the total global exports in 2021. Corn exports from both nations amounted to 18.6 percent of total global exports last year.

The global wheat export volume was 206 million tonnes in 2021, with Russia shipping 35 million tonnes, or 16.9 percent of the total and Ukraine exported 24 million tonnes, or 11.6 percent.

With the rushed and not well-thought sanctions against Russia and the fact that Russia is occupying large chunks of Ukraine, there will be a serious gap in the global food market.

Many analysts feel that if the United States, Canada, Australia, and other nations increase wheat, corn, and soybean production, they will not be able to close the supply deficit.

WIth a stop in Ukraine’s exports of wheat, Lebanon (50 percent of its total imports), Libya (43 percent), and Tunisia (32 percent) will suffer. There are also 14 countries whose dependence on Ukrainian wheat exceeds 10%.

As for Russia, the sanctions will bite and most countries are worried that they will violate the U.S. and EU sanctions, thus they won’t order Russian wheat for example. Only Pakistan got the guts to order 2 million tons after the outbreak of the war.

Food production cycle

Analysts from Anbound says the sanctions will not be the only weak point in the supply of wheat or grains. There is also the possibility that the conflict goes on and Ukraine will miss its production cycle.

According to internal Ukrainian estimates, the spring planting area in Ukraine might be as little as 30% of the predicted area, with the most optimistic estimate being 50%.

The war and by extension the politically-motivated sanctions against Russia will also have an impact on the production and supply of chemical fertilisers, with nitrogen, phosphorus, and potassium fertilisers ranking among the top three of Russia’s supplies of these items.

In 2020, Russia produced 13.5 million tonnes of potash fertilisers accounting for approximately 20% of world supply.

It exported around 10.84 million tonnes, accounting for approximately 19% of world trade volume. In 2020, it appears that Russia have surpassed China as the world’s largest urea exporter, accounting for 14% of global market supply.

Belarus is the world’s third-largest producer of potash fertiliser, accounting for around 17.4 percent of overall potash output. The worldwide fertiliser supply was already strained prior to the Russia-Ukraine war.

Russian ban on exports

With Russia’s recent decision that it will no longer export chemical fertilisers, along with the earlier prohibition on the sale of Belarusian potash fertilisers, more than 30% of the world’s potash fertiliser supply will be impacted.

The global spike in natural gas costs has also hampered nitrogen fertiliser output significantly. The global fertiliser production and supply situation is expected to worsen in the future, and practically every significant crop on the planet is dependent on fertilisers such as potassium and nitrogen.

Without a reliable supply, practically all crops throughout the world will suffer significant difficulty, with far-reaching consequences. This will affect world food production too.

– Source: Anbound