Russia’s appetite for war could lead to the biggest food crisis since the Second World War

Russia’s brutal invasion of Ukraine has led to thousands of deaths, injured many thousands more, displaced over ten million citizens from their homeland and created the most dangerous moment in international affairs in more than 80 years. Yet there may be even more suffering to come; the invasion could lead to hundreds of millions of people going hungry around the world in what some forecast could be the biggest food crisis since the Second World War.

As Barbara Woodward, Britain’s ambassador to the UN Security Council, spelt out so clearly in a debate last week on Ukraine: “Russia’s appetite for war is taking food off the world’s table.” 

Woodward went on to say that the world risks being forced to take food from hungry children to give it to starving children. “We now see spiralling energy prices, and global food insecurity, hitting the most vulnerable the hardest.”

Her comments are no exaggeration: Russia and Ukraine combined are responsible for delivering a huge slice of the world’s most basic crops. They produce about a third of the world’s traded wheat which is equivalent to about 12 % of the population’s calorie intake. Together, they provide 26 countries with more than half of their wheat and they supply nearly a fifth of the world’s barley and over half its sunflower seed products.

Global commodity prices for anything from wheat to fertilisers were already soaring before Russia’s invasion. Stocks of grains were at their lowest for years, mainly because of the disruption to supply chains triggered by the lockdowns which hit production but also transportation of goods. 

Before the war, food prices were already trading at a ten-year – the sort of level not seen since the Arab Spring in 2012 – while energy prices were at their highest for seven years.

But Russia’s blitz on Ukraine has turned that fragility into extreme volatility, and shortages. The impact on global trading could affect every farmer – and household – on earth as the war has shut down much of those grain exports. 

More worryingly, the intense fighting in Ukraine – and particularly around the Black Sea ports where cargo ships are being blocked – may disrupt the planting season which is due to start as the weather becomes warmer. 

Over the last few years Ukraine has become something of an agricultural powerhouse, helped by overseas investment, and is now the world’s fifth biggest exporter of grains. The big trading houses of Cargill, Bunge and Glencore have invested millions in infrastructure in those Black Sea ports which are critical to exporting Ukraine’s grains and oil seeds.

Which is why grain elevators, cold storage sites and even farming equipment are also targets for the Russian military. Soldiers are also blockading the ports – one missile hit a Cargil-chartered ship in the first week of the war.  

It’s estimated that 13.5 million tons of wheat and 16 million tons of corn from last year’s harvest in Ukraine and Russia are stuck because of the war and sanctions. Higher exports from Australia or India – which had good crops last year – are expected to make up some of the shortfall.  

But nowhere near enough, prompting several economists to predict that if the war continues much longer – and crop production is halted – then hundreds of millions of people around the world may go hungry, prompting the worst food crisis since the Second World War. 

In an interview with the National Geographic magazine, Arif Husain, chief economist at the UN World Food Programme, says:  “If this war doesn’t get sorted out in the next couple of weeks, things will get even worse.That means Ukraine will not be able to plant corn. The winter wheat in the ground will not be fertilized, and the harvest sharply reduced.”

“That’s a real danger. They are a country of 40 million people, but they produce food for 400 million. That’s the reality of a globalized world. We are all in this together.” 

Husain goes on to point out that the WFP is planning to feed a record 140 million people this year. This includes the four million or so Ukrainians who have fled their country but another 44 million in 28 countries which are close to famine. Some of those countries are the poorest in the world – Yemen Afghanistan and Ethiopia – and depend the most on grain imports from Ukraine. 

Potentially more damaging than wheat shortfalls, is the exorbitant cost of fertilisers used by farmers in crop cultivation. Russia and its war-time ally, Belarus, provide nearly half of the world’s fertilisers like nitrogen and potash. Combined, they provide 40% of the world’s potash – used as fertilisers but also in preserving tinned food – but both are now sanctioned. 

Even before the war, fertiliser costs were soaring. The price of nitrogen fertiliser – which uses natural gas – has risen by 200% while potash has been in hot demand because of a tightening of supply but also due to sanctions. 

The stratospheric price of potash illustrates the complex chain of supply which binds every country so closely together and shows how what happens in one country feeds into consequences for us all. 

Demand for the mineral began to rise over a year ago when a devastating outbreak of swine-flu in China led to more than 100 million pigs being slaughtered. China had to stock up on grains, and as it does not grow enough of its own soybeans, it increased imports from Brazil. That meant that Brazil had to import even more potash than usual because it was growing more soybeans than usual. And this extra demand kick-started the price of potash which is now selling at a ten-year high. 

At the same time, some European producers of fertiliser cut back on production because the cost of natural gas – used in the process – soared so high. To make matters worse, in the US, Hurricane Ida damaged two large fertilizer plants along the Gulf Coast which have struggled to return to full production. 

In other words, a perfect storm is being whipped up. Economists now warn that the fertiliser disruptions – and the price rises – are the greatest worry for future crop production over the next few years, not just this season. 

What’s happening is a classic example of chaos theory in action: how the beat of a butterfly’s wings in one part of the world can cause havoc in another. We are feeling those butterfly wings beating in the UK. 

Over the last few months Britain’s cost of living has sky-rocketed, due first to the pandemic, and now the war.

Those rising costs have translated into the cost of groceries, which are now 5.2 per cent higher over the last few months and on the rise. Indeed, the National Farmers’ Union is deeply concerned that the cost of fertiliser, as well as energy, equipment and labour is already putting farmers off investing in their future crops. (An added problem is that since Brexit, around two-thirds of seasonal workers have come from Ukraine.)

The NFU estimates that the crisis of confidence is such that farmers’ – who carried the costs last year- and now cutting back on the use of fertilisers. It predicts that production could be hit by a double-digit drop next year, creating food shortages and more price rises. If farmers do not use enough fertiliser, then crop yields will be lower and more imports will be needed: a truly vicious circle.

Which is why the NFU has come up with its own emergency action plan to ensure food security. This includes encouraging banks to be more flexible while lending to farmers, improving the use of organic fertilisers, fixing the immigration system to allow more seasonal workers into the country and to be more flexible for planning reforms for farms to modernise. 

Top of the NFU’s list, though, is for the government to ensure stable UK gas supplies which are absolutely essential to food production: gas is used to produce fertiliser, food processing as well as in slaughterhouses. 

Whether the government yet grasps the full extent of the crisis is unclear. There are small signs that it does: at a crisis meeting today, George Eustice, Defra’s secretary, confirmed farmers will get some costs towards buying fertilisers while delaying restrictions on the use of fertilisers such as urea which are considered polluting. 

While thankfully the UK is 60 per cent self-sufficient in food stuffs, more direct action is going to be needed sustain those levels and to keep food on the table. Yet we should also be looking for opportunities out of this crisis: the chance to become even more self-sufficient in the future.