Srinagar, March 13: The war in Ukraine and the unprecedented economic sanctions and trade ban exchanges between western nations and Russia have brought the world on a brink of a food crisis. India, including Jammu & Kashmir, may not remain immune from the supply and price shocks in case peace is not achieved in Ukraine soon.Russia and Ukraine account for around 25% of the world’s wheat exports and are significant suppliers of corn, barley and vegetable oils. The World Food Programme says it gets nearly 50% of its wheat from the Ukraine-Russia region. Countries like Pakistan, Egypt, Indonesia, Bangladesh, and Pakistan all import more than $250 million worth of Ukrainian wheat annually, according to Bloomberg.
Even as India is world’s second-biggest producer of wheat, and has exported a record of 6.6 million tonne this fiscal so far, rising wheat prices globally are likely to suck greater exports, resulting in further price rise and in domestic markets. Due to the tensions and sanctions, global wheat prices have already gone up and are ruling in the range of Rs 24,000-25,000 per tonne. When it comes to vegetable oils, India is a massive importer of sunflower and soybean oils, making it vulnerable to supply shocks.
When it comes to Jammu & Kashmir, it is a net importer of all its main cereals, including wheat, rice and cooking oils, and remains highly food insecure in case there is any major supply disruption of essential food commodities in the coming days.
Fertilizer price and production concerns
Russia, along with its ally Belarus, is a major exporter of the fertilizers. As crude oil prices shot up and natural gas prices hit a record high, fertilizer producer Yara International has had to curtail its production of ammonia and urea in Europe to 45% of capacity. Many other giant fertilizer companies in India, for instance, are forced to follow suit, Ziraat Times learns from reliable source linked with production management of a leading fertilizer company.
“With such a shortfall of two essential agricultural ingredients, you can only imagine what impact it could have on world food production”, he said.
Urea has been trading near $1,000 per metric ton, about four times the price at the start of 2021, according to Chris Lawson, the head of fertilizers at CRU Group, a market intelligence firm.
Countries without domestic fertilizer production may also struggle to access it, with huge consequences for the global food system.
According to a CNN report, fertilizer output in Europe has also plunged thanks to the surging price of natural gas, a key ingredient in nitrogen-based fertilizers like urea. Svein Tore Holsether, CEO of Yara, says the world is careening toward a food crisis that could affect millions of people.
Vegetable oils price strain
Meanwhile, the cost of corn, soybeans and vegetable oils has risen sharply in the last few weeks, putting South Asian countries like India, Pakistan and Bangladesh – some of the major importers of vegetable oils in a tricky situation. Ukraine alone produces half of all exports of sunflower oil globally.
Elsewhere, Egypt just banned the export of wheat, flour, lentils and beans amid growing concerns over food reserves in the Arab world’s most populous state. Indonesia has also tightened export restrictions on palm oil, which is a component in cooking oil as well as in cosmetics and some packaged goods like chocolate. It’s the world’s top producer of the product.
The G7 ministers called on countries to “keep their food and agricultural markets open and to guard against any unjustified restrictive measures on their exports.”
“Any further increase in food price levels and volatility in international markets could threaten food security and nutrition at a global scale, especially among the most vulnerable living in environments of low food security,” they said in a statement.
Fighting impact on Ukraine wheat season
The ongoing fighting is feared to disrupt the wheat planting season, which is about to begin, in Ukraine. With heavy banking and other sanctions in place, there are deep concerns about products from Russia getting onto the world markets.
“Any serious disruption of production and exports from these suppliers will no doubt drive up prices further and erode food security for millions of people,” the Agricultural Market Information System said in a recent report.
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