We may want to buy locally produced food, but the reality is that agriculture is a global enterprise. Disruptions in agriculture across the globe create ripples in agriculture elsewhere. When major disruptions happen to major food producing regions—like Ukraine—the impact too will be enormous. I recently attended the National Ag Law Center’s seminar on the international Trade Implications from the Ukraine invasion by Russia.
Russia is a major player on the international fertilizer market, according to Corey Rosenbusch, president of Fertilizer Institute. Three of the largest fertilizer manufactures in the world are Russian-based, Uralkali, Eurochem, and PhosAgro. Each of these is headed by a oligarch that has been sanctioned by western governments. Even if the Russians can continue to ship fertilizers out of the country, getting payment is extremely difficult due to banking sanctions. Here is how Russia compares to the US and other countries when it comes to fertilizer production:
Dr. William H. Meyers, Ag Economist from Missouri University, explained that Ukraine and Russia are enormous grain exporters. This is well known today, but it is interesting to see just how much Ukraine’s exports have increased in the last few years.
Ukraine’s production impacts in 2022 are going to be felt around the world. For some countries, the prices for food will be significantly impacted. For others, there may actually be food shortages. Here was a graph shared by Dr. Meyers explaining the potential impacts to other countries.
Professor Mariia Bogonos, Kyiv School of Economics, explained that the impact inside Ukraine is already severe for farmers and consumers. If the Russian invasion moved no further than it has already, there are many parts of Ukraine that will not be able to plant this year’s crop or harvest existing winter wheat, reducing production by about one-third. Since much of Ukraine’s fertilizer comes from Belarus, it seems highly unlikely there will be enough fertilizer for crop needs. If the Black Sea ports remain closed to exporting, much of the exports could still leave the country by truck or rail, but costs of shipping go up significantly. Diesel fuel could also be a problem, but the Ukrainian government is working to fix this concern.
Finally, though not part of the seminar, you can follow along with a farmer inside Ukraine that posts regular updates on conditions on the ground. A Dutch Farmer in Ukraine is a blog posted by Kees Huizinga, who is exactly who he says he is. He wrote recently:
If the war does not end before the end of March, there will be no more exports from Ukraine after the summer of this year. This will especially affect the already unstable countries of North Africa and the Middle East. Food prices could easily double from January 2022 prices, making bread unaffordable for the people of these regions.
Russia has already closed its borders to wheat exports and Ukraine’s exports have been effectively closed due to the closure of Ukrainian ports by Russian warships.
Continue reading on his blog or follow him on Twitter for more updates: @DutchfarmerinUA.