Ukraine War and agri-commodities
- March 6, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Ukraine War and agri-commodities
Topic: Economy
Content:
Ukraine and Russia is a major exporter of agricultural produce and their supplies will get disrupted, leading to increase in food prices. While wheat prices are up nearly the double year-on year, corn are up by 41 per cent and rice by nine per cent since the Port of Odessa has suspended operations bringing all exports to a halt compounded by a dry weather in South America.(The production and export share data provided in all figures is calculated from the USDA Foreign Agricultural Service’s Production, Supply and Distribution database (USDA-FAS PSD) from 2017-21).
- Wheat-
- China, EU and India are the top three largest wheat producers, accounting for about more than 41% of the world’s total wheat production.
- Russia is the 4th largest producer and largest exporter of wheat in the world and Egypt is the largest importer of wheat.
- China and India are major wheat producers, but are net importers and provide relatively small shares of global wheat exports.
- Russia and Ukraine account for 14% of global wheat production and rank 4th and 7th, respectively.
- Russia and Ukraine account for nearly 30 percent of the global wheat supply and the halt in the black sea trade route due to the Ukraine war has disrupted the supply of wheat leading to massive rise in price i.e. a rise of 60%
- Wheat prices are likely to remain elevated as inputs have gone up sharply with prices of fertilizers, fuel, seeds, insecticides and pesticides surging.
- In Asia, only India has the exportable stocks of wheat and prospect of exporting wheat above the government mandated minimum support price.
- Corn-
- The U.S. remains the dominant global producer (32%) and exporter (33%) for corn in the world. While Japan is the largest importer of corn.
- Ukraine now ranks 4th, contributing over 15% of world corn exports. Notably, Ukraine has been the dominant supplier of corn to China. Russia ranks 6th with a 2.3% share of corn exports.
- Corn production in India, Mexico, and South Africa exceeds that in Russia, but accounts for smaller world export shares.
- Barley-
- While the EU holds the dominant production share and is the leading region for world barley exports.
- Russia and Ukraine account for about 19% of barley production and nearly 32% of barley exports.
- Vegetable oil- Indonesia is the largest producer of vegetable oil followed by China, and India is the largest importer of vegetable oil in the world.
- Ukraine and Russia are the leading producers and exporters of sunflower oil which comprises a 9% production share and nearly a 2% export share for the world vegetable oil market.
- Nearly 60% of world sunflower oil production occurs in Ukraine and Russia, and the two countries account for over 75% of world exports.
- India imports around 90 percent of its sunflower oil from the Ukraine-Russia region.
The broad economic implications of Russian invasion of Ukraine, and the resulting sanctions imposed on Russia by the international community, could include disruption of trade flows, greater inflationary pressures, and an increase in volatility across a wide range of global agri commodity markets.