Russia is the world’s largest exporter of wheat, and Ukraine is the fifth largest. Together, they provide 19% of the world’s barley supply, 14% of wheat, and 4% of maize, making up more than one-third of global cereal exports. They are also lead suppliers of rapeseed and account for 52% of the world’s sunflower oil export market. The global fertilizer supply is also highly concentrated, with Russia as the lead producer.
Food prices, already on the rise since the second half of 2020, reached an all-time high in February 2022 due to high demand, input and transportation costs, and port disruptions. Global prices of wheat and barley, for example, rose 31% over the course of 2021. Rapeseed oil and sunflower oil prices rose more than 60%. High demand and volatile natural gas prices have also driven up fertilizer costs.
The Ukrainian ports on the Black Sea have shuttered. Even if inland transportation infrastructure remains intact, shipping grain by rail would be impossible because of a lack of an operational railway system. Vessels can still transit through the Turkish Straits, a critical trade juncture through which a large amount of wheat and maize shipments pass. Rising insurance premiums for the Black Sea region would exacerbate the already high costs of shipping, compounding the costs of food imports.
Russia is a major player in the global energy market, accounting for 18% of global coal exports, 11% of oil, and 10% of gas. Agriculture requires energy through fuel, gas, electricity use, as well as fertilizers, pesticides, and lubricants. Manufacturing feed ingredients and feedstuffs also require energy. The current conflict has caused energy prices to surge, with negative consequences on the agriculture sector.