I mentioned yesterday that Ukraine is a prime vendor of wheat, serving as a breadbasket to the world.
Even before Russia invaded Ukraine, it sent slews of ships into the Black Sea for its “war games” (read as preparation for invading Ukraine). That basically halted Ukraine’s exports of corn and wheat. (Note that Ukraine provides some 13% of world’s corn exports and about 12% of the wheat. Interestingly, one of the prime counties that will be hurt by this is China, which acquiesced to Russia’s invasion of Ukraine. China imported 8.2 million tons of corn from Ukraine in 2021, about 1/3 of its total imports.)
The Russian invasion has primarily overrun the wheat growing regions of Ukraine (the Southern portion, from Kharkiv to Odessa). And, if this war proceeds through March, the farmers won’t be able to apply pesticides or fertilizers, so yields will be decimated (at least reduced by 1/3).
What you may not have heard is that Russia- during it’s campaign of violence against Ukraine- managed to hit a Cargill (the world’s largest private food supplier) vessel as it was approaching its export terminal in Ukraine. Thankfully, no one was injured in the shelling.
It’s, therefore, not surprising that the other biggies in the food industry- ADM (Archer Daniels Midland) and Bunge- have closed their Ukraine operations. (It’s also why wheat futures have hit their highest mark since July 2012, rising some 12% this week alone and European wheat prices increased by 1/6.) That’s going to be disastrous for the world’s food supplies, since some 700,000 metric tons of (winter) wheat flow out of Ukraine from this month through April. (Not to mention what it would do to the later in the year exports of some 8 million metric tons in August and September.)
And, we can’t be sure that Putin won’t try to destroy the ports of Odessa and Mykolaiv in his campaign to suppress Ukraine.
So, that would mean Pakistan, China, Turkey, and Egypt would be very short of grain, leaving the last two countries in very poor position against street protests and potential revolutions.
Not to mention the disruption to our food supplies, as the supply chain crunch extends around the world.
It’s not just between Russia and Ukraine, it go so much farther but some people just don’t see it.
Martha recently posted..Update on My Freezer Clean Out
Touche, Martha! Thanks for making that clear!
Wheat and corn. Oil and gas. Live – lots of them.
My hope is that the stiff resistance, especially within Russia, will push Putin to make a face-saving exit as quickly as possible. It would be very, very bad if Russia wins. It would be absolutely disastrous if Russia is humiliated. That happened to Germany at the end of WWI, and we all know how that turned out.
David Leonhardt recently posted..Plain language writing guide: 51 tips to write in plain English for better readability
Interesting points there, David. Thanks for making us aware of them in this discussion!