War in Ukraine disrupts grain markets and threatens food security in Southeast Asia — BenarNews

As war rages across Ukraine, farmers have been busy towing captured Russian tanks, artillery and downed helicopters. In addition to their new vocation, is the planting of the spring harvest.

It’s another reminder that Russia’s illegal invasion is happening in one of the world’s major breadbaskets, with consequences for food security in Asia and beyond.

What’s at stake? In 2021, Ukraine was the third largest wheat producer, exporting 60 million of its 80 million tonnes harvest. This represented 17% of world exports. In addition, Ukraine was the second largest producer of barley, the fourth largest producer of corn and the largest producer of sunflower oil.

Ukraine and Russia are major players in world markets. But they have a bigger role in the developing world and in humanitarian disasters: half of the World Food Program grain is bought in Ukraine. In 2021, Ukraine exported US$2.9 billion worth of wheat to Africa.

Since the start of the war, the price of wheat, which was already at historic levels, has increased by 30 percent.

Ukraine, along with Russia, is a major supplier of grains and staple foods to Southeast Asia. In 2020, Ukraine exported $708 million to Indonesia, representing 25% of imports; $92 million to Malaysia, 23% of imports; and $131 million to Thailand, or about 17% of imports.

But Indonesia and the Philippines – the most food-insecure countries in Southeast Asia – will be particularly hard hit. Nearly 75% of Indonesian imports from Ukraine consist of cereals, including wheat. In 2021, Indonesia imported 3.07 million tons of wheat from Ukraine. In 2020, Ukraine was Southeast Asia’s most populous nation’s largest grain source, and the largest in 2021.

And in both Indonesia and the Philippines, the demand for wheat is increasing.

According to the Philippine Statistics Agency, in 2021 grain imports increased by nearly 48 percent over 2020. In Indonesia, flour consumption has increased by nearly 5 percent in 2021.

At the same time, the populations of neighboring countries are increasing.

Indonesia’s population is growing at 1.1% per year and the Philippines at 1.3%, making it the fastest growing population in Southeast Asia. In both countries, food production has never kept pace with population growth. And both governments are very sensitive to food commodity inflation.

Fighting spreads to agricultural fields

Meanwhile, in the middle of the sowing season in Ukraine, the war moved from northern kyiv to the east of the country. The fighting is currently taking place in some of Ukraine’s most productive agricultural land.

In places where it is not too dangerous to cultivate, the physical infrastructure has been destroyed. Able-bodied men and women serve in the military or home defense forces. The Ukrainian government expects a 30% reduction in agricultural production this year because of the war. The dire government warnings suggest exports in 2022 could drop to 15-20% of 2021 exports.

Even if farmers are able to grow crops, there are questions about their ability to move grain to world markets. The Russians razed Mariupol and devastated the physical infrastructure and depopulated most other Ukrainian ports on the Asimov Sea. Odessa is the last major port that Russia has not attacked, but Russian forces block it.

At the moment, Ukrainian grain exports only leave the country by train or truck, but if the Russians target logistics nodes in western Ukraine, even these exports could be affected. Local farmers are also vulnerable to a liquidity crunch, unable to get the loans they need to cover operations in the first half of the season.

This does not mean that there is a shortage of wheat sources outside of Ukraine.

Last year, Indonesia imported 4.69 million tons from Australia. In 2020, it imported 2.63 million tons from Argentina. Having suppliers in the northern and southern hemispheres is essential for the regular import of foodstuffs. And after Russia, the United States and Canada, Ukraine is the largest exporter in the northern hemisphere.

Undoubtedly, war is bad news for global food markets.

Cereal prices were climb steadily in recent years at a time when most countries have experienced economic downturns, income losses and rising poverty rates due to the prolonged COVID-19 pandemic. Inflation in energy and staple food markets is hitting consumers hard around the world.

Further uncertainty in food markets

Beyond the Russian invasion of Ukraine, other factors are disrupting global food markets.

China’s winter wheat harvest has been described by their Minister of Agriculture as “the worst in history.”

A drop in water levels along the Mekong due to the construction of dams has increased salt intrusion in the Mekong Delta, leading to a lower harvest. According to Stimson Center, the delta accounts for 50 percent of Vietnam’s rice harvest, but 90 percent of rice exports. In 2020, Vietnam’s exports accounted for 7.4% of global supply. Indonesia and the Philippines are among Vietnam’s main export markets.

Another factor is the economic fallout from the Myanmar coup.

The kyat has lost 60% of its value since the February 2021 military coup, causing a US dollar shortage and do imports of pesticides and fertilizers exorbitant.

While Myanmar itself will remain food secure, the expected drop in harvests will impact global markets. Myanmar is the seventh largest rice exporter in the world. In 2020, it accounted for 3.2% of world exports. Optimistic estimates suggest exports will be around 2 million tonnes in 2022, down from their normal export of 2.5-3 million tonnes.

With the exception of Singapore, Southeast Asian countries have been reluctant to criticize Russia’s invasion of Ukraine and none have been willing to impose sanctions, professing a desire to be neutral . But most Southeast Asian countries will feel the economic pain caused by Russia’s military strike on its next-door neighbour.

As this year’s chair of the G-20, Indonesia is causing controversy by inviting President Putin to the Bali summit, arguing that the forum is really about economic issues, not political or security issues. Yet the cause of commodity inflation – and potential political unrest – will be President Widodo’s guest.

Zachary Abuza is a professor at the National War College in Washington and an adjunct at Georgetown University. The opinions expressed here are his own and do not reflect the position of the United States Department of Defense, the National War College, Georgetown University or BenarNews.

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