Every core element of the food supply chain is affected by the war in Ukraine

Putin has dropped a bomb on the European agricultural sector

Vladimir Lenin once said that "wheat is the currency of currencies". Now his successor Vladimir Putin's invasion of Ukraine threatens repercussions that could lead to higher prices in Ireland but threaten famine in Africa.

Since last Thursday ports along the Black Sea have been shut, cutting off the world’s fifth largest wheat exporter and sending prices to a record high. The global supply chain is already creaking just days into the crisis.

Already the World Food Programme is warning that the "poorest of the poor" will suffer. Grain exports from Ukraine and Russia account for 12 per cent of the world's calories in a time when roughly a third of the global population consume some form for wheat daily.

North African countries and the Middle East rely on the Ukraine and Russia for over half of their cereal imports. Egypt, with a population of 102 million, is the world's biggest importer of wheat, with 80 per cent coming from Russia.

In a country where 40 per cent of the population live below the poverty line, bread is known as aish, meaning life. On Thursday they put out a tender for wheat but only France came up with one single offer of €500 a tonne.

This time last year the price was €250 a tonne. Egypt did not accept the offer yet the country is already suffering increased wheat and flour prices, with comparisons being made to similar food inflation before the Arab Spring in 2011.

For Ireland and other Western countries there will be a slight rise in the price of bread. Ireland imports virtually all the 230,000 tonne of milling flour it needs from the UK or French market. But consumers will need to pay a higher price for milk, beef, pork and chicken if farmers are to meet the rising costs of fertiliser and animal feed.

Animal feed

Over 20 per cent of the world's maize comes from Russia and Ukraine, a large amount of which is used in animal feed. The Irish Grain and Feed Association (IGFA) told The Irish Times it has estimated the war has created an 8 million tonne maize shortage in Europe. The seasonality of global production means that it cannot be immediately sourced from another area.

"This region is the main supplier for maize, rapeseed, beet pulp, sunflower oils and wheat into the EU until the great lakes in the US thaw and we can then access Canadian and USA products," said Maeve Whyte, IGFA director general .

“Prices on the future markets have as a result risen sharply. In some cases there are no sellers available.”

In another calculated move Putin banned the export of ammonium nitrate fertiliser from Russia at the start of February.

Gas is also needed to produce artificial fertiliser, and as the supplier of 40 per cent of Europe’s gas and the world’s largest supplier of ammonium-nitrate, Putin has now dropped a bomb on the European agricultural sector.

For Ireland over 60 per cent of our potassium fertiliser and 30 per cent of our nitrogen fertiliser comes from Russia and its ally Belarus. Farmers that paid €250 for a tonne of fertiliser last year are now faced with paying €720 a tonne.

This price hike is likely to impact other countries even more sharply. Kenya imports 90 per cent and Mali 99 per cent of its potassium fertiliser from Russia and Belarus. These countries will have to pay more for fertiliser or risk lower crop yields and internal food shortages.

However, the IMF has warned that up to 20 African countries are already at risk of debt distress and defaulting on their loans – many of which are held by Chinese banks who make up a fifth of all lending in Africa.

Every core element of the supply chain that goes into providing food has been affected by the war in the Ukraine, from the energy we need to turn on ovens, lights and heating, to the fertiliser we need to grow our own crops. These crops include not just wheat to feed the human population but grass to feed cows and other livestock.

Autumn crops

Over half of Ukrainian soil is used for agricultural production, and if the war continues into June farmers will be unable to harvest six million hectares of wheat. Worryingly, crops may have already been destroyed as 40 per cent of Ukraine's wheat production takes place around the oblasts of Donetsk and Luhansk in the east of the country where fighting has been most concentrated. If the war lasts into autumn it will impact sowing autumn crops and impact next year's harvest.

Filling any form of shortfall will be difficult. While the US has historically called itself a “bread basket”, it is forecast to export 22 million tonnes this year which is less than half the combined amount of the Ukraine and Russia.

There is also the added element of the reliance on Russian gas to process fertiliser, and Russian and Belarusian fertiliser to grow the crops.

Global sanctions against Russia could further exacerbate the strangle hold Putin has on gas, fertiliser and wheat, and further expose Europe’s reliance on Russia.

The humble loaf has often been harnessed as a political tool, from Roman times and the mantra of “bread and circuses” to placate the plebs, to the fishwives of Paris kicking off the French Revolution with a riot over the scarcity and high price of bread.

While all eyes are on the war in Ukraine, Putin has created a global domino effect that will ripple across the world’s food supply.

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