The food economy remains at the heart of geopolitical conflict sparked by Russia’s invasion of Ukraine. The food crisis amid the on-going geopolitical tensions has been brought out by Ekaterina Sotova.

Russia and Ukraine are important players in the global trade of grains and oilseeds among other agricultural commodities. The armed conflict between the two countries has raised concerns over food security for the Middle East and Africa.

The crisis would spur food inflation and the poor harvest due to dry spells in South America and Indonesia and rising demand for wheat and oilseeds in China and India can worsen the situation.

How ill the impending food crisis impact the achievement of SDGs?

In 2020, African countries imported $4 billion worth agriculture produce from Russia. Ninety per cent of imports consisted of wheat and 6 per cent sunflower oil.

Similarly, Ukraine exported about $2.9 billion of agricultural commodities to African countries in 2019-20. About 48 per cent of imports included wheat, 31 per cent maize, and the balancesunflower oil, barley, and soybeans.

It is noteworthy that Russia accounts for about 10 per cent of global wheat production while Ukraine has a 4 per cent share. Russia and Ukraine's contribute about a quarter of the global wheat exports. Russia accounted for 18 per cent and Ukraine, 8 per cent in 2020.

Russia and Ukraine are important players in corn production and had a 14 per cent share of global maize exports in 2020. Also, these two countries lead in sunflower oil production and have a 40 per cent share in exports, with Russia accounting for 18 per cent of global sunflower oil exports.

From the import side, Russia and Ukraine's agricultural imports from the African continent are marginal averaging only $1.6 billion from 2017–to 2020. The dominant products are fruits, tobacco, coffee, and beverages.

The implications

The scale of the potential spike in global cereals and oilseed prices will depend on the magnitude of disruption in production and international trade in commodity and agricultural products.

First, there can be an upside risk to global commodity prices, which have been at an elevated level since April 2021. In January 2022, the FAO Food Price Index averaged 125.7-136 points up from December 2021, its highest since April 2021. Vegetable oils and dairy products underscored the increases as the FAO Vegetable Oil Price Index averaged 164.8 points, marking an all-time high annual inflation of 66 per cent year-on-year. The spikes in the international prices of maize (21 per cent), wheat (35 per cent), soybeans (20 per cent), and sunflower oil (11 per cent) have been reported.

It is a worrisome situation for African countries as they depend on Russia and Ukraine for grains. In the near term, countries would gauge the impact of the armed conflict through a surge in overall prices compounded by rising food inflation.

Second, wheat exporting countries such as Canada, Australia, and the US are likely to benefit from any potential near-term surge in cereals demand. Also, oilseeds growing countries such as China, EU nations, Canada, and India can step into a market dominated so far by Russia and Ukraine.

Third, the armed conflict can have a ripple effect on rising oil and fertiliser prices, affecting farmers in developing and least-developed countries and straining government finances.

Fourth, the geopolitical conflict will undoubtedly impact food security for the Middle East and African countries. Food security has six dimensions: availability, access, utilisation, stability, agency, and sustainability, which are expected to be affected by this crisis. Grain bank and edible oil supply could help meet the starvation of the impoverished in the near term.

Fifth, insulating the domestic economy from this crisis calls for a systematic intervention at three levels connecting the farm and landscape for sustainable agriculture, distribution, and tariffication in cross-border trade.

Agencies such as State Trading corporations, Food Corporation of India, and multinational grains and oilseeds trading firms can help tide over the crisis and create a resilient and efficient food supply chain and public distribution system. Also, export promotion of fortified foods can help the poor of these nations.

The writer is Chairman of CFAM, IIM Lucknow. Views expressed are personal