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The Russia-Ukraine war is putting fire on grain prices again

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The risk of a food crisis in poor Third World countries is visible

Φωτιστις τιμèς των σιτηρo&nu βaζει ξανa ο πoλεμος Ρωσiας – Ουκρ ανiας

Ukraine provides half of the wheat that the World Food Program (WFP) buys and sends to countries such as Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen.

Ancient armies burned the granaries of enemies to force them to starve and submit. Today, a year and a half after its invasion of Ukraine, Russia is again resorting to one of the oldest forms of warfare, “tooling” food and paving the way for a sharp rise in the prices of food staples such as bread and flour. Its withdrawal from the Black Sea grain deal and increasing Russian strikes on Ukrainian infrastructure have reignited fears about global food security as Moscow pushes for a bigger share of Russian grain on the international market. The world index of grain prices rose 10% at the end of July when Russia torpedoed the grain initiative, blocking a route that carried 32 million tonnes a year, more than half of Ukraine's total grain exports.

Market players believe prices will have risen 20% by the end of the summer as Russia and Ukraine target each other's commodity export infrastructure. Russian forces have launched missile strikes against Ukrainian grain terminals and threatened to target all ships traveling on the Black Sea to its ports, while Kiev has launched drone attacks on key targets.

Escalation “increases risk and fuels uncertainty,” warns Arif Hussain, chief economist at the UN's World Food Programme. “A single mistake by either party would have disastrous consequences, because there is no immediate substitute for the grain exported by Russia and Ukraine from the Black Sea,” he explains.

At the same time, blocking Ukraine from being able to export wheat, barley, corn and other grains creates an opportunity for Moscow to gain a larger share of the global grain market, analysts say. Already the world's largest wheat exporter, Russia, had a record grain harvest in 2022-23, increasing their volume by 23% over the previous five-year average. Slightly less production is expected next year, but still significant. That is likely to enable Moscow to export 60 million tonnes this year and next – far more than usual, according to data from S&P Global Commodity Insights.

Ukraine at the same time provided half of the wheat purchased by the World Food Program (WFP) and sent to countries such as Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen. It was of good quality, cheap and could be quickly transported from Odessa across the Bosphorus to the Mediterranean and then through the Suez Canal to Yemen and the Horn of Africa. WFP now has to buy grain at a higher price and transport it from ports much further away.

All this is happening as the global food system faces disruptions, from India's ban on white rice exports to record prices of olive oil. Grain prices will remain high and “increase every time a ship or port is attacked. The area is considered too important in the food chain to be ignored,” emphasizes Kona Hack, head of research at agricultural products trading house ED&F Man. Thousands of families in vulnerable countries struggling to survive remain one of the “collateral casualties” of war, concludes Cindy McCain, WFP's executive director.

Source: www.kathimerini.com.cy

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