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What impact will the Ukraine invasion have on wheat prices?
By Marina Leiva
Fertilizer: Russia, Ukraine Conflict Could Cause Supply, Price Issues – DTN – AgFax
A Russian invasion of Ukraine will most certainly affect the global fertilizer market,
to what extent is not known. Several factors, including what sanctions Russia would
see and if those sanctions included crop nutrients, would dictate how fertilizers are affected.
We do know a conflict in the Black Sea region would probably lower the prospects of
less-expensive fertilizer prices for U.S. farmers in 2022, according to fertilizer analysts.
Home to 25% of the world’s most fertile soils, Ukraine produces wheat that feeds many vulnerable countries, meaning the war will affect food prices worldwide.
Which Country Supplies the Worlds fertilizers – Search (bing.com)
Ukraine was once known as the breadbasket of the Soviet Union, and in more recent decades as the breadbasket of Europe, meaning the Russian invasion is poised to have an effect on food prices across the world, especially on those of food staples such as flour and pasta, and therefore affecting vulnerable countries the most.
According to the UN’s Comtrade, the main destinations of Ukrainian wheat in 2019 were Egypt ($3.65bn worth), Indonesia ($664.5m), Bangladesh ($418.6m), Turkey ($207.4m) and Tunisia ($195.5m). In 2020, Lebanon imported a total of $148.49m worth of wheat. Of that, $119.1m came from Ukraine and $22.9m from Russia. The effects of the war are likely to be felt on bread prices across countries like Lebanon that rely heavily on wheat from Ukraine. More coverage of the Ukraine invasion from Investment Monitor:
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From the Flour War in 1775 France (which acted as a prelude to the French Revolution
14 years later), to the Arab Spring in 2011 (where a spike in grain prices caused initial unrest in Egypt), to more recent protests in Lebanon and Sudan, increases in the price
of wheat can bring about widespread instability, so the invasion of Ukraine by Russia could have a ripple effect across the world in ways that go beyond military action.
Wheat prices were already poised to increase.
To exacerbate the situation, wheat prices were already poised to increase, according to Erin Collier, economist at the trade and markets division of the UN’s Food and Agriculture Organisation (FAO). “Global wheat markets have been tighter this year than usual, and that is because there were reduced harvests,” she says. “At the same time, demand has been really strong, so that has made wheat markets really vulnerable to any – even potential – supply shock.”
With both Russia and Ukraine being major exporters of wheat, this is only going
to add pressure to wheat markets, she adds. Along with the harvest issues, logistic disruptions and high energy and transport costs are also affecting wheat prices.
With Russia also being a major supplier of natural gas and fertilizers, sanctions
could potentially disrupt wheat markets and make prices shoot up, says Collier.
The wider agribusiness sector and FDI in Ukraine are obviously already seeing
the effect of the war.
Agribusiness giant Nestlé has already halted operations in Ukraine, as has the France-based vegetable group Bonduelle, stopping production in a factory the company has in Russia near the Ukrainian border.
Why Ukraine’s black soil is so heavily in demand.
Ukraine’s agricultural strength is partly linked to its fertile black soil, with 25%
of the world’s reserves on its land, according to the US Department of Commerce.
Black soil, or chernozem, covers about 7% of the ice-free land surface in the world,
and is a highly fertile soil rich in minerals, organic carbon, and is at least 25cm deep, according to the FAO.
Chernozem covers an estimated 230 million hectares worldwide as a continuous belt
in steppe and forest-steppe landscapes, mostly in Russia, Ukraine, the Great Plains of
the U.S. and northern Kazakhstan, along with some local concentrations and patches
in central Europe.
This fertile land is behind Ukraine’s grain strength, helping it to become one of the
world’s largest exporters of wheat and maize, as well as the world’s largest exporter
of sunflower oil, which is the fourth most-consumed vegetable oil in the world.
However, despite having rich soils and a strong agricultural sector, between 1932 and
1933 Ukraine experienced one of the worst famines in global history, an event that is now recognized by many countries as genocide, which caused the deaths of between 3.5 million and 7 million people. Known as the Holodomor, which translates as — ‘death by hunger’, the famine is considered within Ukraine to be a product of Joseph Stalin’s plan to keep control of the country, during which time he made it almost impossible for farmers and the rural population to feed themselves or the rest of the population.
Ukraine invasion will impact the global agriculture industry.
With the invasion of Ukraine advancing by the minute and sanctions towards Russia increasing, the importance of Ukraine to the world when it comes to not just agriculture, but numerous other industries are becoming more and more clear. Ukraine may have a strong emotional and geopolitical appeal to Russian President Vladimir Putin, but the riches that lie within its boundaries will also have been a consideration.
As such, from the Holodomor to the more recent annexation of Crimea in 2014 and
now the full-blown invasion, Russia has wreaked havoc in Ukraine time and time again.
With global supply chains already highly vulnerable, however, and many countries round the world reliant on Ukraine’s agricultural produce, the impact of Putin’s action will have repercussions that are much more widespread than many imagine.
A rise in wheat prices can have a huge knock-on effect given the importance of bread to daily diets the world over. The human cost of the invasion within Ukraine is already tragic, but the possibility of other potential impacts due to the country’s importance to the global agriculture market cannot be ignored.
How is the Russia-Ukraine war linked to religion?
Ukraine’s tangled political history with Russia has its counterpart in the religious landscape, with Ukraine’s majority Orthodox Christian population divided between an independent-minded group based in Kyiv and another loyal to its patriarch in Moscow.
But while there have been appeals to religious nationalism in both Russia and Ukraine, religious loyalty doesn’t mirror political fealty amid Ukraine’s fight for survival.
Even though Russian President Vladimir Putin justified his invasion of Ukraine in part as a defense of the Moscow-oriented Orthodox church, leaders of both Ukrainian Orthodox factions are fiercely denouncing the Russian invasion, as is Ukraine’s significant Catholic minority.
“With prayer on our lips, with love for God, for Ukraine, for our neighbors, we fight against evil – and we will see victory,” vowed Metropolitan Epifany, head of the Kyiv-based Orthodox Church of Ukraine.
“Forget mutual quarrels and misunderstandings and … unite with love for God and our Motherland,” said Metropolitan Onufry, head of the Ukrainian Orthodox Church, which
is under the Orthodox patriarch of Moscow but has broad autonomy.
Even that seemingly united front is complicated. A day after posting Onufry’s message on Thursday, his church’s website began publishing reports claiming its churches and people are being attacked, blaming one attack on the representatives of the rival church.
The division between Ukraine’s Orthodox bodies has reverberated worldwide in recent years as Orthodox churches have struggled with how and whether to take sides.
Some U.S. Orthodox hope they can put such conflicts aside and unite to try to end the war, while also fearing the war could exacerbate the split.
WHAT IS THE RELIGIOUS LANDSCAPE OF UKRAINE?
Surveys estimate a large majority of Ukraine’s population is Orthodox,
with a significant minority of Ukrainian Catholics who worship with a
Byzantine liturgy similar to that of the Orthodox but are loyal to the pope.
The population includes smaller percentages of Protestants, Jews and Muslims.
Ukraine and Russia are divided by a common history, both religiously and politically.
They trace their ancestry to the medieval kingdom of Kievan Rus, whose 10th century Prince Vladimir (Volodymyr in Ukrainian) rejected paganism, was baptized in Crimea
and adopted Orthodoxy as the official religion.
In 2014, Putin cited that history in justifying his seizure of Crimea, a land he called “sacred” to Russia. While Putin says Russia is the true heir to Rus, Ukrainians say their modern state has a distinct pedigree and that Moscow didn’t emerge as a power until centuries later.
That tension persists in Orthodox relations.
Orthodox churches have historically been organized along national lines, with patriarchs having autonomy in their territories while bound by a common faith. The Ecumenical Patriarch of Constantinople is considered first among equals but, unlike a Catholic pope, doesn’t have universal jurisdiction.
WHO GOVERNS UKRAINE’S ORTHODOX CHURCHES TODAY?
That depends how to interpret events of more than 300 years ago. With Russia growing
in strength and the Constantinople church weakened under Ottoman rule, the Ecumenical Patriarch in 1686 delegated to the Patriarch of Moscow the authority to ordain the metropolitan (top bishop) of Kyiv. The Ecumenical Patriarch says it was temporary.
The Russian Orthodox Church says that was a permanent transfer.
For the past century, independent-minded Ukrainian Orthodox have formed separate churches which lacked formal recognition until 2019, when current Ecumenical Patriarch Bartholomew recognized the Orthodox Church of Ukraine as independent of the Moscow patriarch — who fiercely protested the move as illegitimate.
The situation in Ukraine was murkier on the ground.
Many monasteries and parishes remain under Moscow’s patriarch, though exact statistics are difficult to find, said John Burgess, author of “Holy Rus’: The Rebirth of Orthodoxy in the New Russia.” On the village level, many people may not even know about their parish’s alignment, Burgess said. Yes, though it’s complicated.
DOES THIS SCHISM REFLECT THE POLITICAL SPLIT BETWEEN THE TWO COUNTRIES?
Ukraine’s former president, Petro Poroshenko, drew a direct link:
“The independence of our church is part of our pro-European and pro-Ukrainian policies,” he said in 2018.
But current President Vladimir Zelinskyy, who is Jewish, has not put the same emphasis on religious nationalism. On Saturday, he said he had spoken to both Orthodox leaders as well as top Catholic, Muslim and Jewish representatives. “All leaders pray for the souls of the defenders who gave their lives for Ukraine and for our unity and victory.
And that’s very important,” he said.
Putin has tried to capitalize on the issue.
In his Feb. 21 speech seeking to justify the imminent invasion of Ukraine with
a distorted historical narrative, Putin claimed without proof that Kyiv was preparing
for the “destruction” of the Ukrainian Orthodox Church of the Moscow Patriarchate.
But the reaction of the Metropolitan Onufry, who compared the war to the “sin of Cain,” the biblical character who murdered his brother, indicates that even the Moscow-oriented church has a strong sense of Ukrainian national identity.
By comparison, Moscow Patriarch Kirill has called for peace but has not laid blame for the invasion. The Ukrainian Orthodox Church under the Moscow Patriarchate has long had extensive autonomy. Plus, it’s increasingly Ukrainian in character.
“Regardless of church affiliation … you have a lot of new clergies who grew up in independent Ukraine,” said Alexei Krindatch, national coordinator of the U.S. Census of Orthodox Christian Churches. “Their political preferences are not necessarily correlated with the formal jurisdictions of their parishes,” said Krindatch, who grew up in the former Soviet Union.
WHERE DO THE CATHOLICS FIT IN?
Ukrainian Catholics are based mainly in western Ukraine.
They emerged in 1596 when some Orthodox Ukrainians, then under the rule of the Catholic-dominated Polish-Lithuanian Commonwealth, submitted to the authority
of the pope under an agreement allowing them to keep distinctive practices such
as their Byzantine liturgy and married priests.
Orthodox leaders have long denounced such agreements as Catholic and foreign encroachment on their flocks. Ukrainian Catholics have an especially strong history
of resistance to persecution under czars and communists. “Every time Russia takes
over Ukraine, (the) Ukrainian Catholic Church is destroyed,” said Mariana Karapinka,
head of communications for the Ukrainian Catholic Archeparchy of Philadelphia.
Ukrainian Catholics were severely repressed by the Soviets, with several leaders martyred.
Many Ukrainian Catholics continued to worship underground, and the church has rebounded strongly since the end of communism. With that kind of history, Ukrainian Catholics may have a strong reason to resist another takeover by Moscow. But they’re not alone, Karapinka said. “Ukrainian Catholics were not the only group persecuted by the Soviets,” she said. “So many groups have reason to resist.”
Recent popes have tried to thaw relations with the Russian Orthodox Church even while defending the rights of Ukrainian and other Eastern Rite Catholics. But after the Russian invasion, Pope Francis visited the Russian Embassy on Friday to personally “express his concern about the war,” the Vatican said, in an extraordinary papal gesture that has no recent precedent.
HOW HAS THE ORTHODOX SCHISM REVERBERATED BEYOND UKRAINE?
The Russian Orthodox Church decided to “break the Eucharistic communion” with the Ecumenical Patriarch of Constantinople in 2018 as he moved to recognize an independent church in Ukraine. That means members of Moscow- and Constantinople-affiliated churches can’t take communion at the other’s churches.
The disputes have spread to Eastern Orthodox churches in Africa, where the Russian Orthodox have recognized a separate set of churches after Africa’s patriarch recognized
the Ukraine church’s independence.
But many other churches have sought to avoid the fray. In the U.S., with multiple Orthodox jurisdictions, most groups still cooperate and worship with each other.
The war may provide a point of unity among U.S. churches but may further test relations, said the Very Rev. Alexander Rentel, chancellor of the Orthodox Church in America,
which has Russian roots but is now independent of Moscow.
“This split that took place in world Orthodoxy was a difficult event for the Orthodox Church to process,” he said. “Now it’s only going to become more difficult because
of this war.”
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Will Ukraine invasion cause a rise in wheat prices? Investment Monitor.
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