Information briefing on the Ukraine-Russia crisis and impacts on global food markets. Joe Glauber and David Laborde February 27 2022 version. See blog at https://www.ifpri.org/blog/how-will-russias-invasion-ukraine-affect-global-food-security

1. Background information on
the impact of the Ukraine
crisis on global food
security
JOE GLAUBER AND DAVID LABORDE
28 FEB 2022

2. Food prices were high before the
beginning of the conflict
❑ La Nina -> hurt South
America, in particular soybean
production
❑But Argentina wheat
production has been spared
❑Drought in Middle-East:
increased demand
❑But better rain in Levant in the
last few weeks: opportunities
for wheat spring
❑Supply constraint and trade
restrictions on Palm Oil in SE-
Asia

3. Global grain and oilseed stocks (ex China)
are at low levels, except rice
❖Wheat stocks at lowest level since 2007/08
❖Corn stocks at lowest level since 2012/13
❖Soybean stocks at lowest level since 2011/12
❖Rice stocks at highest level in more than 20
years
0
20
40
60
80
100
120
Ending stocks (days of use)
Corn Soybeans Rice Wheat

4. Energy and Fertilizer Prices

5. Grains Markets

6. Global market share, key products 2018-
2020
Russia
5.8%
Global Market
Share in
Calories
Ukraine
6%
Global Market
Share in
Calories

7. Top 15 countries more dependent to UKR exports

8. The timing of disruption:
major export periods by country

9. Monthly Exports for Ukraine and Russia –
Cumulated Share along the year

10. Fertilizers

11. Key features
Global fertilizer prices soared to multi-year highs in the past few months following surge in
prices of key feedstocks natural gas and coal, and certain export restrictions put in place by
supplying countries.
Coal ->Gasification -> Ammonia Key
pathway in China
Generic
Pathway

12. Export bans
China's ban since September 2021 on exporting phosphate fertilizer to ensure domestic supply
supported fertilizer prices.
◦ China, the leading fertilizer supplier globally, banned exports of fertilizers and urged coal and natural gas
companies to fulfil contracts signed with domestic producers of fertilizers.
Russia also banned fertilizer exports soon after.
India imports an average 60% of the 10 million-12 million mt of its annual DAP consumption.
According to an early-December Reuters report, 40% of this comes from China.
◦ India is also a manufacturer of fertilizers and the country's fertilizer sector relied on LNG imports for
between 60% and 73% of its natural gas feedstocks in January to October 2021.

13. Russia + Belarus : about 15% of world
markers of fertilizers

14. The role of natural gas prices &
Nitrogenous fertilizers
70 – 80% (in normal
price conditions) of
N fertilizer cost is
natural gaz

15. Within Ukraine borders
REVIEW OF SPATIAL DISTRIBUTION OF PRODUCTION, AND EXPOSURE TO MI LITARY OPERATIONS
ROLE OF CALENDAR
INFRASTRUCTURE PROBLEMS

16. Barley and Sunflower are less
exposed

17. Wheat and Corn production
could be disrupted/annexed

18. Disruption in production operations:
schedule
Impact on production: differentiated impacts on planting decision vs harvest process, in case of
occupation/conflict (partial/full coverage of the territory)
◦ Planting decision:
◦ most wheat is already planted (planted in the fall of 2021), harvest in July and August.
◦ Need to get estimates of the winterkill for the fall planted crops. Ukraine is known to get wide variation in the survival rate (2%
destroyed in 1990, 65% in 2003.).
◦ Most Barley (90%), the main feed crop in Ukraine now, is planted in Spring (April) and harvested in August. Main Region is
EASTERN part.
◦ Corn is typically planted in late April or early May. Harvest begins in late September and is usually nearing completion by early
November. Half of the grain is used for grain. Rest is cut for silage. Data flag: USDA corn estimates refer to corn for grain only.
◦ Sunflowers are typically planted in April and harvested from mid-September to mid-October. Southern and Eastern region
Main source: NASA Earth Observatory
April
Planting
July
Harvest

19. Exporting Grains: 2 critical corridors,
Normal shipping pattern
De facto Russian Blockades
Disuptions occurred before the conflict (military exercise, since the beginning of operations). On the 24th, number of
ships have tried to leave the area in emergency and some were damaged: “A shipping vessel chartered by Cargill Inc.
was struck by a missile early in the day as it was leaving a strategic Black Sea port on Ukraine's southern border."

20. Infrastructure and Institutional risk
▪Internal rail network in Ukraine is key to the grain sector
▪80% of the grains are moved by rail
▪Current infrastructure are already inefficient. Any attack on the railroad
network could be totally disruptive.
▪Role of the “Gray” market: about 40% of agricultural products are traded for
cash, which means no taxes, no return export processes.

21. Future implications

22. Food security consequences
➢Short term crisis for key food importers
➢Disruption for WFP operations
➢Medium term consequences from the fertilizer
makers
o Higher production cost and food prices
o Actual shortages → lower yields → lower food
supply → higher food prices
o Higher fiscal costs for governments
Example Egypt:
Egypt had cancelled a tender last Thursday after
receiving only one offer of French wheat, as at least
two offers are required for a purchase to go ahead..
The GASC had to cast a wider net in its latest
tender, calling for offers from the US, Canada,
France, Bulgaria, Australia, Poland, Germany, the
UK, Romania, Serbia, Hungary, Paraguay and
Kazakhstan, in addition to Russia and Ukraine. The
delivery would be scheduled for April.
Increase cost of public subsidies
Even if sensitive the price of bread is expected to
rise → challenge for local policy makers
Example Bangladesh:
Government has increased fiscal envelope for
fertilizer subsidy from $1.3bn to nearly $4bn, about
4% of total gvt budget in 2022 → large deficit

23. Consolidation of Russian position
Food as a strategic weapon
▪Potential annexation of farm land
▪Consolidation of a Russia-block:
▪ Russia
▪ Belarus (acceleration of Russian direct influence control in 2021)
▪ Kazakstan (military support in early 2022 to crush local opposition)
▪ Ukraine: puppet state and/or control of the Black sea ports
→ Pressure on net food importers
Similar dynamics for fertilizers

24. Climate change will strengthen the role of
Russia
https://doi.org/10.1016/j.jeem.2020.
102408
The crucial role of domestic and
international market-mediated
adaptation to climate change,
Journal of Environmental Economics and
Management, Volume 106, 2021. C.
Gouel and D. Laborde

25. Policy Responses

26. Policy responses matter during crisis (and after)!
Trade sanctions should avoid food and fertilizer businesses*. Humanitarian operations should not be disrupted
Avoiding a spiraling crisis on global and regional markets through additional trade restrictions by exporters
Addressing global demand of crops for biofuels
Supporting an open and inclusive global trading system by favorizing the emergence of new actors
Protecting consumers during the storm: the role of social safety net
Making sure that farmers have access to inputs for the next planting season
Long term repurposing of food policy spending's: realigning incentives for products and consumers