Agriculture supply shocks due to Russia’s war cause hardships for numerous states

Ukraine is one of the most important global suppliers of primary agriculture and food commodities. Since its independence in 1991, the country has continuously increased crop yields of various agricultural products and expanded its global exports. The consequences of the Russian war of aggression are now hitting not only the Ukrainian agricultural sector itself, but also those countries that are particularly dependent on agricultural imports from Ukraine. In our study Ukraine's Role in Global Food Supply: Individual Countries' Vulnerability, we explore which countries are most affected by these supply shocks. 

The analysis is designed to shed light on the implications for shortfalls in supply of six key products. In sunflower-seed oil, Ukraine has become the world's largest producer, supplying nearly 40 percent of global exports. For corn (13 percent) and barley (12 percent), Ukraine ranks fourth. In wheat, it is the fifth-largest producer globally, accounting for eight percent of global exports. In soybeans, Ukraine ranks seventh, accounting for more than one percent of worldwide exports. Among poultry producers, the Eastern European country ranks tenth and is responsible for a good two percent of all global exports. 

In 2021, before Russia's war, Ukraine produced around 5.4 tons of grain per hectare. This yield doubled since 1991. There were similar growth rates in other agricultural products, for example, regarding sugar beets, potatoes, vegetables, and berries and fruits. In total, Ukraine exported USD 27 billion worth of agricultural products last year, including 86 million tons of grain and 16 million tons of sunflower seeds. 

The current war has reduced grain exports from five to six million tons per month to 0.2 million tons in March 2022. In April, the situation did ease slightly, with an increase to 1.2 million tons. Nevertheless, according to Miriam Kosmehl, Bertelsmann Stiftung's Eastern Europe expert, "the much bigger problem threatens to be the expected crop failures this year, alongside with their effects that reach into next year. The wheat harvest could be down by as much as around eleven million tons in comparison to last year's, and the corn harvest is likely to be halved. This would have a dramatic impact on agricultural markets, as Ukraine itself is likely to need large portions of the crop locally and will probably export much less."

To better assess such consequences, in our study we examined 141 countries that import agricultural products from Ukraine in at least one of the six categories. The focus is, on the one hand, on how high the respective import share of the required products is and, on the other hand, on how difficult it is for the importing countries to replace this share. The analysis classifies the following states as particularly vulnerable:

• Wheat: Lebanon, Thailand, Mauritania, Tunisia, Indonesia, Korea, and Yemen (86 countries analyzed) 

• Barley: Sri Lanka, Qatar, Saudi Arabia, Cyprus, Lebanon, Guyana (57 states) 

• Maize: Lithuania, Tunisia, Netherlands, Finland, Portugal, Ireland, Israel, Denmark, Spain, United Kingdom, Norway, Cyprus, Belgium, Lebanon, Egypt (82 countries) 

• Sunflower-seed oil: India, Nepal, Oman, Guinea, United Arab Emirates, Ivory Coast, Guyana, Algeria, Lithuania, Netherlands, Jordan, Costa Rica, Palestine, Sri Lanka, China (126 countries) 

• Soybeans: Georgia, Belarus, Kenya, Poland, Moldova, Greece, Azerbaijan, Turkey, Sri Lanka, Lithuania, Hungary, Lebanon, Kuwait, Finland, Switzerland (49 countries) 

• Poultry: Kyrgyzstan, Armenia, Slovakia, Moldova, Azerbaijan, Georgia, Netherlands, Seychelles, Gambia, Montenegro, Mauritania (80 countries) 

Across all product categories, countries in Asia, Africa and Europe are likely to be most affected by the expected supply shocks. The greatest risks exist for Lebanon, Tunisia, and Sri Lanka. Overall, more than a third of the countries surveyed are vulnerable to negative agricultural supply shocks from Ukraine. The situation for countries in Africa and Asia is exacerbated by the fact that, due to the occupied or blocked Ukrainian seaports, most exports will initially have to be made by rail and will therefore remain in Europe to a large extent. 

The EU has taken initial steps to at least cushion the collapse in supply volumes. For example, with tariff rate quota lifted for agricultural products from Ukraine and the Republic of Moldova, there are already import concessions. An action plan intends to open alternative supply routes. Greater harmonization of logistics infrastructures between Ukraine and the EU and an agreement on road transport are also recommended. At the same time, Miriam Kosmehl says: "To ensure that not only European countries benefit from measures to tackle Ukrainian shortfalls in exports of agricultural products, targeted solutions for African and Asian countries affected must be found in order to maintain their supplies." 

In her expert's view, the most important prerequisite for this is that "policymakers must realize that the worst effects will become apparent next year, when no new grain will arrive, and prices will rise even more." Consequently, she says, it is necessary to introduce measures and initiate changes now that can alleviate the looming food shortages in Africa and Asia. These include, in addition to a strategic diversification of imports on the part of the importing countries, fairer trade agreements that improve the competitiveness of local agricultural economies. The transfer of innovations and the establishment of efficient production processes can also help to make the worst effected countries less dependent on agricultural goods from Ukraine.