The impact of Russia's war against Ukraine on global and Iranian food security

Ukraine and Russia are among the world's largest exporters of grain, especially wheat. The war that Russia has started against Ukraine is endangering world food security and increasing the number of hungry people. Iran will not be immune to its consequences.

Experts say the war that Russia has started against Ukraine, the end of which is unclear, could have serious consequences for food prices in the world. Russia was the world's largest wheat exporter in 2021. It is followed by the United States, Canada and Australia, with Ukraine in fifth place.

This year, Russia produced 10 percent and Ukraine 4 percent of the world's wheat. The European Union's share of wheat production for world markets has been around 20 percent in recent years.

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

Millions of people die of hunger

German Development Minister Sonia Schulze says Russia's war against Ukraine could have disastrous consequences for food supplies in Africa and other poor parts of the world. "Russia and Ukraine are the world's largest exporters of wheat and therefore the breadbasket of the world. If these exports collapse now, food prices will continue to rise, although they are already very high due to the coronavirus and the rising cost of energy and fertilizer," she said on the sidelines of a meeting of EU development ministers in Montpellier, France.

Experts say that without measures to deal with the consequences of the Ukraine war, millions of people could die of hunger.

Initial estimates suggest that the conflict could push between 8 and 13 million people into starvation in the Middle East and Asia, particularly in Africa. The continued disruption to food markets caused by the conflict is estimated to increase the number of people suffering from malnutrition by between 4.2 and 6.4 million in the Asia-Pacific region.

This figure could affect between 2.6 and 5.2 million people in Africa and nearly 960,000 people in the Middle East. That is why experts believe that we must think about both immediate measures and mechanisms that will ensure global food security in the long term.

How dependent is Iran's food market on Russia and Ukraine?

With the start of the Ukrainian war, Iran, as a neighbor of Russia and dependent on some key agricultural products from both countries, will also face the problem of jeopardizing food security. Especially since the continuous increase in food prices in Iran, even without this war, has made people's tables smaller year by year.

Official statistics on Iran's foreign trade with Russia and Ukraine this year are around two billion dollars, with the emphasis being that Ukraine's share is far less than Russia's. Eqtesad Online wrote that in the first 10 months of this solar year, Iran's total foreign trade was around 133.6 million tons of goods worth 80 billion and 236 million dollars, of which Iran's foreign trade with Russia and Ukraine was around four million tons worth less than two billion dollars.

According to the same Iran-Russia trade statistics, Iran's imports from Russia during this period are 2.9 million tons, which is an increase of 11.5 percent in weight and 30.6 percent in value compared to the same 10 months of last year. Last year, Iran's imports from Russia were 2.6 million tons worth $901 million.

Eqtesad Online quoted customs spokesman Ruhollah Latifi as saying that Iran’s major imports from Russia are food products and basic goods. According to him, Iran’s imports from Russia include sunflower seed oil, semi-industrial items and raw materials, wood, newsprint, and pharmaceutical items. Iran has imported more than $694 million worth of wheat, $72.2 million worth of corn, barley, and soybeans from Russia.

This year, Ukraine's imports to Iran amounted to 174.4 thousand tons worth more than $111.7 million, which, according to Latifi, is an 11.6 percent decrease in weight and a 105.7 percent increase in value compared to the same period last year. Imported items from Ukraine include wheat, corn, sunflower oil, machinery, and some oil equipment.

Consequences of the Ukrainian War for Iran

The consequences of Russia's aggression against Ukraine quickly manifested themselves in the gold, metals, energy and global stock markets. In European supermarkets, price changes are visible, but the upward trend is not yet rapid. This is something that will soon accelerate if the war continues.

What about Iran? The war in Ukraine could affect Iran both politically and economically. Although this war could have dire consequences, some in Iran see it as a wasted “opportunity.”

Sadruddin Niavarani, vice president of the National Union of Iranian Agricultural Products, told ILNA news agency that exports of vegetables and fruits to Ukraine have stopped, but the situation with Russia is different.

Since Russia is not subject to a food embargo by Europe and its contracts with European countries for importing food are still in place, food is being transported from Europe to Russia, as the Europeans are fulfilling 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 are not interested in exporting to Russia after the fall in the value of the ruble, and since the Russians do not have dollars or euros to trade with (they have been subject to currency sanctions), it is necessary for Iranian traders to make long-term plans to take over the Russian market."

He sees the devaluation of the ruble and the economic sanctions on Russia as an opportunity for Iran. Niavarani says: "Since Russia is under sanctions by other countries, we can make the best use of this opportunity and even increase prices. The doors of the Russian market have been opened to Iran, and we must make the most of this opportunity. The cold in Russia has deprived farmers there of the opportunity to grow vegetables and fruits. Cabbage, beets, and turnips are grown in the southern regions of the country, but they do not meet their needs and they need to be imported."

He has urged officials not to "miss the opportunity of the Russian market," adding: "Unfortunately, some mismanagement caused us to lose some foreign markets. We must wait until we finish importing food from Europe to Russia to replace them."

Eqtesad Online wrote that Iran "maybe the positive point is the heavier weight of Iran's trade with Russia compared to Ukraine, which, given the positive political situation between Iran and Russia, can be hoped that Iran's losses from this war will be slightly less."

Prices of wheat and oilseeds are rising.

Mohammad Reza Mortazavi, head of the Iranian Food Industry Associations, told ILNA that a significant portion of Iran's wheat is procured from Russia and a portion of corn and oilseeds from Ukraine, followed by Germany, Australia, Canada, Argentina, and the Baltic countries. He added that by May of next year, about 3.5 million tons of wheat should be imported into the country.

Referring to the rising prices of wheat, corn, and oilseeds due to Russia's war against Ukraine, the head of the Iranian Food Industry Association predicts: "It is possible that we will buy wheat for $10 or $20 more, but we will not have a problem with supply."

This is despite the fact that, according to the head of the Iranian Food Industry Associations, the increase in wheat prices in the past six months has been unprecedented, and the stagnation in price increases over the past five years has been broken.

According to him, food prices will continue to rise until May next year, and "the war between Russia and Ukraine will increase the world's thirst for food storage," especially "when China and Egypt enter the grain market for storage purposes, global prices will be under pressure."

Mortazavi expressed hope that Iranian agriculture will benefit from significant rainfall in Farvardin next year, leading to “higher harvests for rainfed crops” and Iran’s reliance on foreign purchases becoming less pronounced. However, he emphasized: “Even if our rainfed crops are highly productive, we still need to import at least 15 to 16 million tons of basic goods into the country.”

In his opinion, if the world does not witness a new international war, we should expect prices to decrease in June next year.

These words are being said at a time when the food shopping basket of the people in Iran has been severely depleted, even before Russia's invasion of Ukraine, due to skyrocketing prices and severe poverty for a large portion of the people, and their purchasing power has been severely reduced.

The G7 Agriculture Ministers' Meeting and the Food Security Problem

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

Germany has held the presidency of the G7 (the world's seven industrialized nations) since January 1. The country hosts the annual summit of the leaders of the United States, Japan, France, Italy, Britain and Canada. In May this year, the agricultural conference of the member states will be held in the state of Baden-Württemberg.

Among the issues the meeting will address is Russia's aggression in Ukraine and its implications for global food security. Markets for wheat and corn, as well as trade in fertilizers, which are desperately needed for food production, have been affected by the war.

"We are closely monitoring the effects of this war on agricultural markets," says German Agriculture Minister Cem Özdemir. "The increase in food prices is visible worldwide, at least partly due to the sharp increase in energy costs, the increase in the prices of agricultural raw materials and fertilizers."

Following Russia's invasion of Ukraine, Germany's agriculture minister has called a special meeting of his G7 counterparts in early March to discuss the impact of the war in Ukraine on global food security. The ministers are calling for effective measures that can be implemented quickly to stabilize agricultural markets.

Source: DW