World Grain - April 2022 - 6

FROM THE EDITOR
EDITORIAL STAFF
Editor
The massive price tag
of Putin's war
A
s the conflict in Ukraine teeters
dangerously close to igniting
World War III, the consequences
of Russian President Vladimir
Putin's shocking decision to invade its
sovereign neighbor on Feb. 24 are being
felt far beyond the battlefield.
The price tag of this war to the interconnected
global economy is staggering.
NATO allies have responded to
this unprovoked assault with a series of
economic sanctions that have sent Russia's
struggling economy into an even
deeper tailspin. The sanctions include
the reduction or outright ban of Russian
oil imports by the US and other NATO
countries. This has resulted in historically
high fuel prices that - in addition
to soaring inflation that was already
present due to supply chain problems
stemming from the pandemic - are
significantly impacting individual and
corporate balance sheets worldwide.
But an even more unwanted consequence
of Putin's regrettable assault is
its dire impact on the world's grain markets,
and in turn, global food security.
Wheat supplies, which already were
trending tighter before the war, are sure
to plummet with two of the world's largest
wheat exporters engaged in a bloody
battle. Countries that are traditionally
dependent on Black Sea region grain
supplies, such as Egypt, have banned
exports to protect their domestic supply.
As for the two warring nations, Russia
already was limiting grain exports
before the invasion. Now, with Western
governments cutting economic ties, you
can expect the Kremlin to further reduce
exports. As for Ukraine, its role as one
of the biggest grain exporters has been
diminished in the short term - and
perhaps for the long term as well. Infrastructure
critical for the cultivation and
transport of grain has been damaged. A
reduction in agricultural manpower is
6
another concern as farmers are included
among the 3 million refugees who have
exited the country and those who have
volunteered to fight against Russia.
Also, if Putin's forces achieve his objective
to install a puppet, pro-Russian
leader in Kyiv, one can assume the new
government would adopt a more protectionist
stance on grain trade than its
free-trade predecessors. Besides wheat,
Ukraine accounts for 20% of global
corn exports and a whopping 80% of
sunflower oil shipments, sending importers
of those products scrambling for
alternative suppliers.
As others have shunned Russia, China
has remained its ally, even agreeing to
import more Russian wheat this year to
offset a historically small crop. But because
China is highly dependent on soybean
imports - and Russia is not a major
soybean producer - if it chooses to
remain a Russian ally as the war grinds
forward, the US - China's top soybean
supplier - could decide to ban exports
to the world's top soybean consumer.
These potential changes in trade flows
also will impact the United Nations'
World Food Programme (WFP), which
notes that since the pandemic began
two years ago, the number of people
facing acute food insecurity has more
than doubled to 276 million. The war in
Ukraine has hampered the WFP's ability
to provide food assistance,
since 50% of its
grain comes from the
Russia-Ukraine area.
Even if the conflict
never spreads beyond
the Ukrainian border
- let's pray it doesn't - the repercussions
of Putin's war will be widespread,
negatively impacting the entire planet.
Arvin Donley
Editor
Managing Editor
Associate Editor
Digital Media Senior Editor
European Correspondent
China Consultant
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World Grain - April 2022

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