Ukraine's ports have been blocked.
While exports from Ukraine by sea are paused, food prices are rising on world markets, and some countries are at risk of food shortages and hunger riots, reports the Chronicle.info with reference to Focus.
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Due to Russian aggression, Ukraine cannot export agricultural products by sea through its own ports and is forced to look for alternative ways.
«Even having established transportation abroad by rail, Ukraine will not be able to return to the pre-war level of agricultural exports until the sea terminals are unblocked and the activity of sea terminals is resumed», warns Kateryna Gupalo, lawyer, partner of JSC « ;Arzinger».
Accordingly, the state is losing one of the main sources of foreign exchange, and the developed Ukrainian agricultural sector is in danger of decline. However, there is no question of a lack of food in the domestic market. As Dmytro Onosovskiy, lawyer, senior lawyer at UCC De Jure notes, Ukraine can provide itself with food by sowing only 30% of the sown area, but this implies only survival, not development.
How the world depends on Ukrainian exports
The blocking of food supplies through the Ukrainian ports of the Black and Azov Seas harms not only Ukraine itself. Svetlana Lytvyn, an analyst at the Ukrainian Agrarian Business Club (UCAB), notes that the lack of Ukrainian export supplies creates a significant shortage of some food products, which is felt in all countries of the world. After all Ukraine provides 12% of world trade in wheat, 16% in corn and 50% in sunflower oil.
Anzhela Makhinova, partner of international trade practice at Sayenko Kharenko Law Firm, draws attention to the fact that a new research of the World Trade Organization«Crisis in Ukraine. The consequences of the war for global trade and development» experts suggest that due to the closure of ports, a decrease in acreage, the uncertainty of the fate of crops, a shortage of fuel, plant protection products and labor, the volume of exports from Ukraine will significantly decrease.
Total exports from Ukraine and the Russian Federation to Lebanon account for 83% of the total grain imports to this country, to Egypt — 73%, Tunisia — 53%, the United Arab Emirates — 52%, therefore, the countries of Africa and Asia will suffer first of all.
Due to the war, food becomes more expensive
The shortage of agricultural products from Ukraine has already led to a rapid rise in food prices on world markets. The FAO food price index in March 2022 increased by 12.6% compared to February. Svetlana Lytvyn notes that this was mainly due to the record growth in prices for vegetable oils (23.2%) and grain crops (17.1%) against the backdrop of Russia's aggression against Ukraine.
«In the world [since the beginning of the war], there has already been a rise in prices by 25-30% of wheat and 35% of soybeans. Experts believe that the rise in prices will also affect grains, which are not exported by Ukraine and the Russian Federation, but can become substitutes. Therefore, prices for rice have already increased by 12%, for oats — by 8%», Makhinova continues.
The experts surveyed expect food prices to rise further.
« “Given the further rise in prices for fuel and fertilizers (some of which have already risen in price by five times), food prices in the world will increase,” comments Dmitry Onosovsky. — This process began due to the coronacrisis, and the Russian attack on Ukraine has significantly accelerated it».
Domino effect. What to expect from agricultural exports
The impact of Russian aggression on world food markets could be quite long, even if the situation normalizes in the coming months.
«Now it is reported that 30% of the sown area in Ukraine is not sown grain, and only because of this, the expectations of harvest volumes for this year are significantly lower. That is even if seaports resume their work at the time of the 2022 harvest, the volume of Ukrainian grain available for export is predicted to be less«, notes Kateryna Gupalo.
According to Dmitry Onosovsky, the volume export of agricultural products will depend on the situation in the war: in case of favorable development, 65-75% of last year's indicators can be shipped for export, in case of a negative scenario — much less. That is, the food crisis may worsen.
Makhinova notes that in the context of military operations in Ukraine, experts even mention the likelihood of a repeat of the «Arab Spring» (waves of protests in the Arab world in 2010-2012) and mass food riots in other countries.
«If the situation does not stabilize, then it is likely that in 2022-2023 the planet may face mass starvation. And such warnings are already being heard in the agro-community of developed countries,” adds Onosovsky.
That is, the evil that Russia has done to Ukraine can cause a series of dramatic events with unexpected consequences in other parts of the world.