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How will the attack on Ukraine affect food supply chains?

Russia’s invasion on Ukraine is expected to spike food prices and halt exports

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A rail mounted gantry crane.

A rail mounted gantry crane lifts a 40-foot shipping container and loads it onto a rail car at the Georgia Ports Authority Mason Mega Rail Terminal, on Oct. 21, 2021, in Savannah, Ga. Prices and supply chains could be affected by the Russian invasion of Ukraine.

Stephen B. Morton, Associated Press

Ukraine is referred to as the “breadbasket of Europe,” according to CNBC. Russia’s invasion on Ukraine could lead to a spike in food prices for the country, though.

Russia and Ukraine are superpowers in the global food supply chain: Combined, Russia and Ukraine are responsible for one-third of the world’s wheat exports, one-fifth of the world’s corn, and almost 80% of the world’s sunflower oil production, according to the U.S. Department of Agriculture.

Exports are being halted in Ukraine, causing chaos for several countries: A ban on commercial ships in the sea of Azvov — which leads to the Black Sea — has caused the closure of Ukrainian ports. As grain exports from Ukraine are transported by sea, the conflict is predicted to “wreak havoc on food supply flows,” according to Financial Times.

Price increases are already being seen around the globe:

  • The New York Times states that wheat stocks on the Chicago Board of Trade rose by 5.43% on Thursday.
  • Last year, Russia —the world’s largest wheat exporter— raised taxes on wheat exports to ensure supply and reduce price increases within Russia, reports AgWeb.

Who is affected by the price increases?: Further restrictions in wheat supply could increase prices in several parts of the world, including Australia, Argentina and the American Midwest, according to The New York Times.

Looking ahead:

  • If there are significant disruptions to the shipment of grains, the world could see wheat prices such as those during the recession in 2007-08, according to Andrey Sizov, the managing director of SovEcon.
  • The tipping point will come in four months, during harvest season in Ukraine. If farmers are not able to harvest because of lasting military operations, or if ports and railroads are damaged, the situation could be critical. A halt in the Ukrainian harvest season will lead to chaos for several countries, according to The New York Times.