The war in Ukraine blocks a vital supply line, are Ukraine and Russia agricultural superpowers. Not only Europe will feel this, says Sebastian Lakner from the University of Rostock ntv.de. An estimated 103 days can dhe world population itself feed on stocks of grain and corn. What happens after that? “We should take this part of the crisis very seriously,” warns the agricultural economist. um to secure the supply of people with maize, grain and rapeseed, he strongly recommends questioning the meat export and the blending of biofuels in petrol.
ntv.de: There are concerns about a world food crisis. Will the Ukraine war lead to global famine next?
Sebastian Lakner: The situation is serious, but not completely hopeless, I would say. Over the past 10-15 years, Ukraine has become a significant supplier of agricultural products on the world market. Ukraine had a world market share of 14 percent in the grain sector in 2021/22. This makes it one of the most important suppliers alongside Russia, Canada and the USA. While Russia’s share fluctuates, Ukraine was always a safe bet – until the war. The war is affecting production, but also infrastructure, so export volumes are likely to collapse.
Which agricultural products are we talking about specifically?
The Ukraine is a very fertile region due to its black earth soil. In addition to barley and wheat, the autumn orders also include winter rapeseed, which is an important basic component for oils. Summer orders for spring cereals, corn and sunflowers account for a smaller proportion, but are also significant. But the orders would now have to take place in March and April. In a military conflict like this one is out of the question. The war is a crime against the civilian population, but it is also a disaster for all of Ukraine’s agriculture.
What do we know about the current situation on site?
At the moment the farmers can neither fertilize nor carry out crop protection. The factories lack fuel because the peasants either give it to the army or it is burned to keep the Russians from getting hold of it. As a result, the companies cannot work. That’s dramatic. The export business is also heavily dependent on infrastructure. However, the Russian military deliberately destroyed bridges and roads. A colleague recently described the situation as saying that he would be happy if Ukraine was able to manage to be self-sufficient by the end of the year.
Is there still storage on site that is waiting to be transported and could possibly serve as a buffer for its own population?
They actually still exist from the last harvest in late summer. These are corn stocks that are in the Black Sea ports of Odessa or Mykolaiv. The Russians are blocking the sea route there. Theoretically, there is still hope of transporting it overland – via Romania and the Danube – but that would be more expensive.
What role does Russia play as Exporter of agricultural products for the world market?
Russia has more land resources but not quite as many good locations as Ukraine. Nevertheless, the world market share for grain in 2021/22 is also around 10 percent. Kazakhstan’s share is 7.3 percent.
This part is not sanctioned, so it remains on the world market …
Sebastian Lakner, Professor of Agricultural Economics at the University of Rostock
This is where it really gets complicated: there are those who are already pricing in the loss of export volumes from Russia. If we add Ukraine, Russia and Kazakhstan together, we’re at 25 percent world market share for grain and corn. But I would be cautious about Russia’s share of exports. Medical products and agricultural goods are currently exempt from the Swift sanctions. It is true that agricultural traders in western industrialized countries face trouble with the US government if they trade with Russia. Established retailers will therefore avoid doing business in Russia. But there are numerous countries that do not support the sanctions and traders that do not do business with the US or the EU, Russian exports could be bought here. These would then have to go overland or the Caspian Sea, which would be more expensive. In this respect, one cannot yet open a final calculation. We need to monitor the situation closely. Again, a lot depends on how long the war lasts.
How will the supply crisis affect Europe and Germany in particular?
Basically, two things have to be said: In many areas of the EU, we are initially self-sufficient. In Germany, we have a degree of self-sufficiency of just over 100 percent in the grain sector. The same applies to other EU countries. In the case of pork, we are even at 130 percent in the EU. That is, the meat industry exports quite successfully, which becomes a problem in the current situation. The shoe pinches at the moment, especially when it comes to animal feed. The debate here is more about the supply of cheap animal feed and less about the threat of a world food crisis, but the latter should concern us. So there is a certain imbalance in the debate. There will be shortages here and there in the EU, but Europe as a whole is prosperous enough not to experience a supply crisis. Nevertheless, low-income households could come under pressure from rising food prices, but this can be cushioned by social policies.
Which countries will the supply crisis hit the hardest?
In recent years, Ukraine has delivered a lot to the Middle East, the Maghreb and East African countries such as Eritrea and Ethiopia. The World Food Program has also been supplied from Ukraine. Unlike the EU, these countries are extremely dependent on imports. This is the part of the crisis that we should take very seriously and where we should see what options we have.
What are the global reserves that humans could draw on?
There are stocks in the EU. In the case of wheat, for example, that is 65 percent of the missing export volume from Ukraine. But there are also stocks in other countries. However, we do not know exactly how much of it can be mobilized.
And how long will these supplies last?
Global stocks for grain and corn are estimated to account for 28.4 percent of consumption. In other words, that would mean that we could feed the world’s population for 103 days from existing stocks. However, these figures are estimates by the US Department of Agriculture and are not very reliable because we cannot verify stock levels in China, for example. Inventories can cushion the crisis somewhat, but that alone will not be enough, so we need a response from the supply side.
This brings us to the control mechanisms of politics. What are the solutions?
At the moment, the industrialized countries still allow us to add biofuels to gasoline. Technologically and in terms of energy policy, this is not a model for the future because we will phase out this type of combustion in the medium term. That doesn’t solve our energy problems. We’re talking about really substantial amounts here. Half of the corn harvest in the USA is used for bioethanol, and wheat or sugar beets are also used for bioethanol in the EU. The admixture obligation could be suspended in the near future and thus certain quantities of grain could be recovered. We have to “scrape together” at many ends in order to arrive at the missing amounts. It is the task of the ministries to coordinate internationally and to take measures.
Speaking of scraping. There are also loud calls for environmental regulations to be put to the test or largely reduced for this purpose…
The Farmers’ Association has not only demanded this in the last few weeks, but has repeatedly demanded it. From 2023 there will be an obligation to set aside four percent of arable land for environmental and climate protection reasons. This is initially a sensible measure from an environmental point of view, but it will not play a role for the 2022 harvest. But the problem is: You can’t produce on these areas like this. It is quite conceivable that the EU will only start with 2.5 percent of this fallow obligation in 2023 and only gradually increase it. But you also have to know that these fallow areas – currently around 2 percent across the EU – are not the best locations, on which quality wheat cannot be produced everywhere. The fallow land will by no means solve the overall crisis on its own and the abandonment of fallow land has ecological follow-up costs. In addition to the Ukraine crisis, the climate and biodiversity crises continue unabated, we just don’t notice them at the moment. From that point of view it would have jumped pretty short. The Farmers Union has good connections with feed producers. One argues with the food crisis, but means the replenishment of inexpensive feed. This line of argument is not honest and also not objective.
When should politicians start taking action?
Debates have been going on in Berlin and Brussels for a few days, but unfortunately there is a parallel to the Corona crisis: we are not discussing the right measures. The main issue in Brussels is precisely this end to environmental measures, as demanded by the farmers’ union. But that does not solve the demand problems on the world market. What we should discuss is whether it makes sense that we as a society want to maintain our meat consumption and meat exports in this situation and whether we can afford questionable petrol blending requirements despite the food shortage. We can still decide to temporarily release the fallow land in May or June. It cannot now be a question of fundamentally questioning agri-environmental policy, but of how we can replace the missing export volume from Ukraine.
with Sebastian Lakner voiced Diana Dittmer.