On-the-Ground Updates

The war in Ukraine generates a food crisis that will hit developing countries

Market & Price Trends
Innovation & Technology
Dario Parlascino
Published Mar 9, 2022
The conflict in Ukraine causes collateral damage in other parts of the world. The price of wheat and other staple foods skyrockets, threatening the poorest people in developing countries. The price of wheat rises every day until it reaches its historical maximum. On the Chicago Stock Exchange, the most important place for trading agricultural products, wheat is now worth 50% more than before the Russian attack on Ukraine.

The reason for the huge increase in prices is because both parties to the conflict, Russia and Ukraine, are among the world's largest wheat exporters. Russia is by far the largest exporter of wheat in the world. It is followed by the US, Canada, France, and Ukraine in fifth place. The most grain from Russia and Ukraine is exported in the summer and fall, "so the big problems are yet to come." The war makes it difficult to export grain, and if it goes on for a long time, planting and harvesting will not be possible in Ukraine as usual.

This conflict will cause the price of wheat to rise even more, which will cause a big problem for other developing countries that depend on imports of this type of food. Countries like Lebanon or Egypt import most of their staple foods, often to the degree of between 70% and 90%. Kenya is also dependent on wheat imports. 80% of Kenya's wheat is imported. Only 20% is grown there—Argentina imports from several countries, including Russia and Ukraine. The economist said what is happening there now - in Ukraine - will collapse supply chains.

Turkey is also heavily dependent on wheat imports. Wheat is not the only important food product that Russia and Ukraine export. In the case of corn and barley, it corresponds to almost 20%, and in the case of sunflower oil, it reaches up to 80%. We see the price increase, not only for wheat but also for other foods.

For the poor in developing countries, rising food prices mean one thing above all: famine. It is true that some countries like India and China still have large reserves of wheat. However, that would not be enough to offset the Russian and Ukrainian sides.
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