Consequences of Russia’s War Against Ukraine on Global and Iran’s Food Security

Ukraine and Russia are among the world’s largest grain exporters, particularly wheat. The war that Russia has launched against Ukraine threatens global food security and increases the number of hungry people. Iran will not be spared from its consequences either.

Experts say the war that Russia has launched against Ukraine, with no clear end in sight, could have serious consequences for food prices worldwide. In 2021, Russia was the world’s largest wheat exporter. After this country, the United States, Canada, and Australia follow, and Ukraine ranks fifth.

In the current year, Russia produced 10 percent and Ukraine four percent of the world’s wheat. The European Union’s share in wheat production for global markets in recent years has been around 20 percent.

Ukraine and Russia are also major sunflower oil exporters. In 2021, Ukraine was the world’s leading exporter of this product, and Russia ranked second. Russia is also a very important exporter of fertilizers worldwide.

Millions of Deaths from Starvation

Sonya Schulze, Germany’s development minister, says Russia’s war against Ukraine could have catastrophic consequences for food supply in Africa and other poor parts of the world. Speaking at the margin of a meeting of European Union development ministers in Montpellier, France, she said: “Russia and Ukraine are among the world’s largest wheat exporters and therefore the world’s bread basket. If these exports now collapse, food prices will continue to rise, although these prices are already very high due to coronavirus and rising energy and fertilizer costs.”

Experts say that without taking measures to counter the consequences of the Ukraine war, millions of people could die from hunger.

Based on initial forecasts, this war could push 8 to 13 million people in the Middle East, Asia, and especially Africa into starvation. It is estimated that the continuation of food market disruption due to this war would increase the number of malnourished people between 4.2 to 6.4 million in the Asia-Pacific region.

This figure could affect between 2.6 to 5.2 million people in Africa and affect the lives of nearly 960,000 people in the Middle East. For this reason, experts believe that immediate measures should be taken and mechanisms developed to ensure global food security in the long term.

How Dependent is Iran’s Food Market on Russia and Ukraine?

With the start of the Ukraine war, Iran, as a neighbor of Russia and dependent on certain agricultural products from both countries, will face the problem of food security being endangered. Especially since the continuous rise in food prices in Iran, even without this war, has made people’s tables smaller year after year.

Official statistics of Iran’s foreign trade with Russia and Ukraine in the current year have been around two billion dollars, with the caveat that Ukraine’s share is far less than Russia’s. Online Economy has written that in the first 10 months of the current Persian year, Iran’s total foreign trade was approximately 133.6 million tons of goods worth 80 billion and 236 million dollars, of which Iran’s foreign trade volume with Russia and Ukraine was approximately 4 million tons worth less than two billion dollars.

Based on these same statistics, Iran’s trade with Russia during this period shows Iran’s imports from Russia at 2.9 million tons, which compared to the first 10 months of last year increased by 11.5 percent in terms of weight and 30.6 percent in value. Last year, Iran’s imports from Russia were 2.6 million tons valued at 901 million dollars.

Online Economy, quoting Rouhollah Latifi, the spokesperson of the Customs Bureau, has written that the bulk of Iran’s imports from Russia are allocated to food products and basic goods. According to him, Iran’s imports from Russia include sunflower seed oil, semi-industrial items and raw materials, wood, newspaper paper, and pharmaceutical items. Iran imported more than 694 million dollars worth of wheat, 72.2 million dollars worth of corn, barley, and soy beans from Russia.

In the current year, imports from Ukraine to Iran were 174.4 thousand tons valued at more than 111.7 million dollars which, according to Latifi, decreased by 11.6 percent in terms of weight and increased by 105.7 percent in terms of value compared to the same period last year. Items imported from Ukraine include wheat, corn, sunflower oil, machinery, and some oil equipment.

Consequences of the Ukraine War for Iran

The consequences of Russia’s invasion of Ukraine in the gold markets, various metals, energy, and in the global stock market quickly showed itself. Changes in prices are visible in European supermarkets, but their upward trend is not yet accelerated. This will accelerate more quickly if the war continues.

What about Iran? The Ukraine war could affect Iran both politically and economically. Although this war can have serious consequences, some in Iran see it as an “opportunity” not to be missed.

Sedroddin Niavaran, vice president of Iran’s National Union of Agricultural Products, tells the ILNA news agency that exports of vegetables and fruits to Ukraine have stopped, but the situation with Russia is different.

Since Russia has not been subject to European food sanctions and its contracts with European countries for importing food remain in place, food is being transported from Europe to Russia because Europeans are honoring their previous contracts with Russia, but no new purchases are being made.

He also referred to the fall in the value of the ruble and said: “Iranian traders have no inclination to export to Russia after the fall in the ruble’s value, and since the Russians don’t have dollars or euros to trade (they are under currency sanctions), Iranian traders need to make long-term plans to capture the Russian market.”

He sees the decline in the ruble’s value and Russia’s economic sanctions as an opportunity for Iran. Niavaran says: “Since Russia is sanctioned by other countries, we can use this opportunity in the best way and even increase prices. The doors of the Russian market have opened to Iran and we must take maximum advantage of this opportunity. Russia’s cold climate has deprived farmers of the ability to grow vegetables and fruits; in the southern regions of this country, cabbage, beets, and turnips are grown, but this does not meet their needs and they need imports.”

He, who has asked officials not to “miss the opportunity of the Russian market,” adds: “Unfortunately, some mismanagement has caused us to lose some foreign markets. We should wait until the import of food from Europe to Russia ends so that we replace them.”

Online Economy has written that Iran “perhaps a positive point is the heavier weight of Iran’s commercial relations with Russia compared to Ukraine, which given the positive political situation between Iran and Russia can be hoped that Iran’s loss from this war is slightly less.”

Wheat and Oilseed Prices Rise

Mohammad Reza Mortazavi, chairman of the Federation of Iran’s Food Industries Associations, tells ILNA that a significant portion of Iran’s wheat comes from Russia and some of the corn and oilseeds from Ukraine, and following these countries, Germany, Australia, Canada, Argentina, and other Baltic region countries are other suppliers of Iran’s wheat. He adds that by Ordibehesht of next year, approximately 3.5 million tons of wheat should be imported into the country.

The chairman of the Federation of Iran’s Food Industries Associations, referring to the rise in the prices of wheat, corn, and oilseeds affected by Russia’s war against Ukraine, predicts: “There is a possibility that we will buy wheat 10 or 20 dollars more expensive, but we will not have a problem with supply.”

This is while, according to the chairman of the Federation of Iran’s Food Industries Associations, the increase in wheat prices in the last six months has been unprecedented and the stagnation of price increases in the last five years has been broken.

According to him, food prices will continue until Ordibehesht of next year, and “the Russia-Ukraine war raises the appetite for purchasing food in the world for storage.” Especially since “whenever China and Egypt enter the grain market for storage purposes, global prices will be under pressure.”

Mortazavi has expressed hope that Iranian agriculture will receive significant rainfall in Farvardin of next year and “the amount of rain-fed crop harvest will be higher” and Iran’s reliance on foreign purchases will decrease. Nevertheless, he emphasizes: “Even if our rain-fed farming is productive, we still need to import at least 15 to 16 million tons of basic goods into the country.”

In his view, if the world does not witness a new international conflict, prices should be expected to decrease by Khordad of next year.

These statements come as the shopping basket of food for people in Iran has become severely depleted due to staggering price increases and severe poverty of a large portion of the population, even before Russia’s invasion of Ukraine, and purchasing power has severely declined.

Meeting of Agriculture Ministers of the “G7” Group and the Problem of Food Security

In some European countries and especially Germany, although the situation is not comparable to poor countries in the world, food prices have also increased in the past two years and now this upward trend has accelerated further. These countries are looking for ways to deal with this situation.

From January 1 of the current year, Germany took over the presidency of the “G7” group (the world’s seven industrialized countries). This country will host the annual summit of the leaders of these countries with representatives from the United States, Japan, France, Italy, Britain, and Canada. In May of this year, the agriculture conference of member countries will be held in the state of Baden-Württemberg.

Among the issues this meeting will address is Russia’s invasion of Ukraine and its consequences for food security in the world. Wheat and corn markets, as well as trade in various types of fertilizers, which are desperately needed for food production, have been affected by this war.

Cem Özdemir, Germany’s agriculture minister, says: “We are closely monitoring the effects of this war on agricultural markets. Rising food prices are evident at least due to sharp increases in energy costs, rising prices of agricultural raw materials and fertilizers around the world.”

Following Russia’s attack on Ukraine, Germany’s agriculture minister called for a special meeting with his counterparts in the G7 group in early March. The purpose of this meeting is also to examine the impact of the Ukraine war on global food security. Agriculture ministers are seeking to adopt effective measures that can be quickly implemented to stabilize agricultural markets.

Source: DW