The disruption in supply chains caused by the conflict in Ukraine and sanctions against Russia will lead to a shortage of fertilizer and a major global food crisis as soon as in 2023, the German publication Compact reports, citing market experts.
Many international organizations say that the failing food supplies from Russia and Ukraine will lead to a giant leap in global food prices and a scarcity of food. Many countries, especially in Africa and Southeast Asia, depend of grain, vegetable oils and other agricultural products supplied by Russia and Ukraine, says Artyom Deyev, head of analytics at AMarkets. Russia has banned exports of certain agricultural products causing grain prices to spike on the global market. This, in turn, prompts (among other factors) inflation in the developed economies – Europe and the US. Amid these developments, many countries are actively boosting their reserves of agricultural products and commodities, while the poorer countries are left with nothing.
“This situation can lead to a food shortage in developed countries and famine in the poorest ones,” the expert told Invest Foresight. “Look at the example of 2010, when due to large-scale wildfires in the European part of Russia, the country had to cut grain exports to a range of partner countries. Egypt faced soaring bread prices followed by a food shortage. The situation, among other factors, became a catalyst of the Arab Spring – a wave of uprisings and coups that enveloped several countries.”
Russia will not face famine or food shortage, the analyst says. The country has both a developed agro-industrial sector and sufficient land resources to be able to boost production. There are also state strategic reserves that will be enough for a long time, and the future yields.
As for inflation, Artyom Deyev suggests relying on official forecasts. The Central Bank and other agencies expect the maximum inflation rate at 20%-22% this year; in a positive scenario, it will be 17.8%. As of mid-April, Russia’s inflation rate is 17.6%; the growth rate has slowed down in the past few weeks.
“Let’s hope this trend will continue and inflation will go down in Russia,” the expert concluded.