The Russia-Ukraine war is already causing food crisis around the world.
While many pundits ( myself, included) are focused on the current jump in global crude oil prices, there is an even more important price shock that needs the world’s attention: the current spikes in global food prices. Recent food price increases caused by the Russia-Ukraine are already leading to food security problems around the world, as the war intensifies existing food crises and raising the likelihood of famine in parts of the world. The Food and Agriculture Organization of the United Nations (FAO) estimates that if the war results in a prolonged reduction of food exports by Ukraine and Russia, the number of undernourished people globally could increase by between 8 million and 13 million. Food shortages are already acute in East Africa, which has had three years of drought leading up to this crisis. Given today’s backdrop of climate change and drought, existing food shortages, and a growing global population, we should not underestimate the impact the Russia-Ukraine war is having, and will continue to have, on the world. It will push some countries into famine and many people will die. Developed countries will likely see even higher inflation, rising unemployment, and declining economic growth, just as occurred in the wake of the food price shocks of the 1970s—which, at the time, were the largest the world had ever seen. Nonetheless, developed countries will have to provide humanitarian aid, including food, to help alleviate global hunger and suffering. Thus far, the current spike in food prices is the second largest the U.S. has experienced in the post-World War II era. Russia and Ukraine are two of the most important agriculture commodity exporters in the world. The war has closed Ukrainian ports and Russia has difficulty exporting because of the financial sanctions imposed on it by the U.S. and its allies. The disruption of these agricultural products is devastating for the food security of many nations. Russia has a 18% market share of global wheat exports, while Ukraine has a 10% market share. For barley, Russia has a 14% market share and Ukraine 12%. In sunflower oil, Ukraine is the largest global exporter with a 37% market share, while Russia has a 26% market share.
