Due to the Russian invasion of Ukraine, a worldwide food crisis is on the horizon. In response to overwhelming international sanctions, Putin has hit the world with counter-sanctions that halt grain and fertilizer exports. This has resulted in other agricultural producers, like Hungary, ceasing their grain exports to safeguard their domestic food supply.
These counter-sanctions taken by Putin will make the entire globe suffer. Russia is the world’s top wheat producer. They are also a major fertilizer producer. In 2019, Russia was ranked the 4th largest nitrogen fertilizer producer, with 10,368,944 metric tons. This is just slightly behind the United States, which produced approximately 11 million tons in the same year.
While most people think of Russia as primarily dependent on their energy sector, they also have a thriving agricultural industry. Russia and Ukraine combined make up a third of the world’s wheat and barley exports. This means Putin can deliver a weighty counter to international sanctions and spiral the world into a global famine scenario if his calculations are correct.
Argentina, Turkey, Moldova, and most recently, Hungary, have all banned grain exports. These countries are correct in taking these protectionist measures. Putin’s invasion of Ukraine and countersanctions halted crop and fertilizer shipments from the Black Sea regions, the world’s breadbasket. Prices of wheat have already surged by 55% out of expectation for the coming global famine.
Throughout the pandemic, nations around the world conserved their agricultural produce and limited international trade. However, this is not a new trend. The pandemic just exacerbated it. Worldwide agricultural production has been waning for some time, with global grain stockpiles dropping for a fifth consecutive year.
Abdoloreza Abbassian, an independent analyst, known for tracking agriculture markets, warns of global food inflation and food shortages:
“It’s something one has to be worried about because we know it has happened in the past. This is already a perfect storm. You don’t need that one.”
Hungary’s grain export ban took effect immediately. This season, Hungary shipped 127,000 tons of soft-wheat abroad but will secure their remaining harvest for themselves.
Bulgaria is a much larger grain producer than Hungary and has not yet announced a ban on exports. However, a Bulgarian association of grain producers claims that cargoes are being obstructed from leaving ports, making it seem like an export ban is coming shortly.
Understand that these are not faraway international affairs that won’t impact you. The coming global food crisis will soon arrive in your grocery store, possibly doubling and tripling your food expenses for the foreseeable future.
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