ACTIVTRADES WEEKLY

By Ricardo Evangelista

www.activtrades.bs

The shockwaves caused by Russia’s invasion of Ukraine continue to reverberate, transcending the nations directly involved and the wider European region. The impact has been profound and felt globally, both in the political and economic spheres.

Western leaders have been busy, discussing how to support Ukraine’s fight against Russian aggression while avoiding an escalation of the conflict. Another hot topic has been the imposition of sanctions on Russian oil and gas exports, which is a complex balancing effect as alternatives are hard to find and such moves will only worsen inflation, exacerbating already-high energy costs in the global markets.

But now, more than three months into the conflict, a new concern is emerging. Dwindling Russian exports, due to direct sanctions or the closure of financial channels, and the blockade on Ukrainian Black Sea ports by Moscow’s navy, are dramatically reducing shipments of agricultural commodities from two of the world’s main producers. Against such a background, the combination of poor weather affecting harvests in the Americas, Africa and Asia; rising production prices; and scarcity of fertiliser cast a threatening shadow over food security for hundreds of millions.

Before the war, Ukraine was known as the world’s breadbasket. So its inability to export is nothing short of catastrophic, considering that even before the conflict started the situation in the global food market was already stressed.

It is estimated by the United Nations (UN) that, before Moscow’s troops crossed the border, 276m people around the world were already facing food shortages. Considering that, out of these 276m, approximately 130m receive regular supplies delivered by the UN, and that at least 50 percent of this food comes from either Russia or Ukraine, it is likely that - if nothing changes - mass starvation across some of the world’s poorest regions will soon be making headlines.

Attempts to export cereals from Ukraine by road have so far proved insufficient, barely reaching 20 percent of the volumes usually achieved by sea. The opening of the port of Odesa to maritime traffic plays a crucial role in resolving this situation. As the executive director of the United Nations World Food Programme recently said to the Financial Times, failure to open the port will amount to a declaration of war on global food security.

Besides the tragedy it represents for the poorest in developing nations around the world, which on its own should be enough to trigger urgent action, the undermining of food security also presents significant geopolitical risks. As food costs escalate, and the less fortunate get priced out of the market, social instability is growing in places as far apart as Sri Lanka, Peru and Indonesia. There are already enough challenges to be dealt with, so the last thing our embattled world order needs is the outbreak of new conflicts. Let us hope that, if basic human compassion is not enough to shift positions, a rational analysis of the potential wider consequences will lead to urgently needed action.