Russian invasion will trigger surge in food prices for the world’s poorest, UN agency says

Russia’s invasion of Ukraine will hurt the world’s poorest and hungriest people, triggering a sharp rise in food and shipping costs that will damage humanitarian operations globally, the United Nations food agency says.

“This is catastrophe on top of catastrophe,” said David Beasley, executive director of the World Food Programme. “It’s just heartbreaking.”

Mr. Beasley was speaking on Thursday in a social-media video from Yemen, where the WFP has already been forced to impose a 50-per-cent cut on its food aid to eight million people because of a lack of resources. The Russian invasion of Ukraine will make the global food crisis much worse, he said.

“We get 50 per cent of our grain out of the Ukraine-Russia area,” he said. “It’s going to have a dramatic impact on food costs, shipping costs, oil and fuel. Just when you think it couldn’t get worse, it’s going to get worse.”

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In a separate statement, the WFP said it was deeply concerned by the war. “The Black Sea basin is one of the world’s most important areas for grain and agricultural production, and the food security impact of the conflict will likely be felt beyond Ukraine’s borders, especially on the poorest of the poor,” the food agency said.

“Interruption to the flow of grain out of the Black Sea region will increase prices and add further fuel to food inflation at a time when its affordability is a concern across the globe following the economic damage caused by the COVID-19 pandemic.”

The UN agency provides aid to up to 120 million people annually, often in conflict zones, but the need is far greater than that. “We now have 283 million people marching towards starvation with 45 million knocking on famine’s door,” the WFP said. “The world cannot afford to let another conflict drive the numbers of hungry people even higher.”

Many analysts are forecasting that the Russian invasion of Ukraine will spark a surge in global agricultural prices as a result of trade disruptions and sanctions. The price of most agricultural commodities will soar by about 25 per cent in the near term, according to London-based Capital Economics.

In an early sign of the price pressures, wheat futures on the Chicago Board of Trade increased by 5 per cent on Thursday. Ukraine and Russia are also major exporters of barley, corn and sunflower oil.

Ukraine, and especially its Black Sea region, is known as one of the breadbaskets of the world, with fertile soil and close connections to sea ports. Much of its food exports go to impoverished or war-ravaged countries such as Libya, Yemen, Lebanon and Bangladesh. About half of all wheat consumed in Lebanon, for example, is imported from Ukraine, while Libya imports more than 40 per cent of its wheat from Ukraine.

“Together, Russia and Ukraine account for between 25 and 30 per cent of global wheat exports, and around 80 per cent of global sunflower seeds,” Capital Economics said in a note on Thursday. “Most of these exports leave from Black Sea ports, at the heart of where military conflict might occur.”

Another British-based firm, Oxford Economics, agreed that the Ukraine war will cause a spike in food prices, and it noted that these prices are already about 30 per cent higher than they were a year ago.

The prospect of higher food prices is a major concern in Africa, which is a net importer of wheat and other grains.

Wandile Sihlobo, an agriculture expert at Stellenbosch University in South Africa, said food prices in Africa have been rising for the past two years because of global droughts and increasing Chinese and Indian demand.

“The Russia-Ukraine conflict presents an additional upside risk and is worrying, especially for the East Africa region where there is also drought and a need for grains imports,” he told The Globe and Mail on Thursday.

In a separate published commentary, Mr. Sihlobo said there are already signs that the Russian invasion of Ukraine is causing a surge in agricultural commodity prices.

“Disruption in trade because of the invasion, in the significant producing region of the Black Sea, would add to elevated global agricultural commodity prices, with potential knock-on effects for global food prices,” he wrote in the commentary.

“The Russia-Ukraine conflict means that pressure on prices will persist. The impact on prices … cannot be overstated.”

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