World food prices hit new record on impact from Ukraine war

The impacts of the war in Ukraine are resonating far beyond the Soviet bloc with a global food crisis becoming a very real threat. Together, Russia and Ukraine feed billions of people by exporting more than a quarter of the world’s supply of wheat, and both are key suppliers of sunflower seed oil, barley, corn and fertiliser.

Since invading its neighbour in February, Russia has continued to ship wheat and other commodities, despite western sanctions hampering the country’s ability to receive payment. Ukraine, however, will fail to plant and harvest at least 30 percent of its crops this year, decimating global supply.

The looming threat has seen global food prices have hit alarming record highs, sky-rocketing at the fastest monthly rate in 14 years. March’s food price index from the United Nations Food & Agriculture Organisation (FAO) rose to its third record high in a row, jumping 34 percent from the same time last year. International food prices could increase a further 22 percent above already elevated levels, according to the FAO.

A closer look confirms, however, that prices of agricultural goods have been on the rise since before Russia invaded Ukraine. There are many contributing factors: inflation, escalating transport and energy prices, workforce shortages, disruption in logistics and other Covid-related issues contributed to the increase, along with a fertiliser price boom.

The price of fertilisers used to boost crop yields has increased 30 percent since the beginning of the war between Ukraine and Russia – but had already doubled in value before between 2020 and 2021 – long before tensions boiled over. Rather, fluctuations in the world energy market were to blame for upward-spiralling prices, along with unfortunate weather events.

While the big agriculture companies have benefited from the recent volatility, some have done so with heart. In August 2021, Cargill Inc cashed in on the booming agricultural market, reporting its largest profit in the company’s 156-year history. Since the conflict in Ukraine began, the company has continued to operate essential food production in Russia despite pressure, stating that food is a basic human right and that any profit made will be donated to humanitarian efforts.

On the broader spectrum, public competitors like Tyson Foods, Archer Daniels Midland, and Bunge have out-performed the market as the cost of soybeans, grains, and corn surge.