Ukraine War: crisis in food supply chain will be 'multi-faceted'

By Michelle Perrett

- Last updated on GMT

Yield improvement and reduced reliance on fertilisers were highlighted as solutions
Yield improvement and reduced reliance on fertilisers were highlighted as solutions

Related tags: Supply chain

The Russian Ukranian crisis will be 'multi-faceted' with reverberations felt both regionally and globally, Ling Sin Fai Lam, director of environmental, social and governance and sustainability at Shore Capital has said.

Speaking at an online webinar called “Food for thought: security of supply and sustainability against the twin challenges of climate change and geopolitics”, ​she highlighted the risk to global food security from the war and climate change.  

“The risk to global food security includes risk to trade, logistics, production, humanitarian crisis and energy,”​ she said. 

Last month it was revealed that the impact of the war had seen output growth of food and drink manufacturers​ fall to an eight-month low. 

She also highlighted the regional impact of the Ukraine Russian war which has led to an immediate crisis in the region. 

“Firstly, farmers are going to be unable to harvest their fields and it is estimated that between 20% to 30% of produce was not harvested this season,”​ she said. 

Constrained

“Secondly, Ukraine’s capacity to plant next season's crops are limited and constrained as well.” 

This is further challenged by the fact that agricultural supply chains are 'complicated', as there are only a limited number of windows for planting and harvesting. On top of that, she highlighted, processing facilities are closed in Ukraine and a sizeable amount of grain that has already been harvested will not yet be able to be processed. Even if the grain was processed it was going to be stuck in the region because internal logistics and infrastructure have been destroyed and it was harder to transport, she said. 

Global supply of commodities such as wheat, which are typically transported via the Black Sea using ships, faced further challenges. “Vessels bound for the Black Sea will face increasing insurance premiums and are actually facing those increased insurance premiums to operate in the area. This is going to put further pressure on prices for the commodity.”

However, she stressed that the world was never previously dependent on Russian and Ukrainian wheat. 

Russia now exports 37m tonnes of wheat while Ukraine exports 18m tonnes. This is in sharp contrast to 2001 when Vladimir Putin came to power as each exported 4m to 5m tonnes respectively.

Food systems

“In fact, when Putin came into power one of his first reactions was after learning that Russia imported 50% of its food supply was to actually going about making sure it shifted away from that,”​ she added. 

From a climate point of view the way the planet farms and feeds its population is having an impact on the food supply chain, she said. 

“Climate change will also impact our food systems,”​ she added. “Temperature rises, water shortages, wind and fires are all evidence of climate change which will have an impact on our agricultural productivity.” 

She did highlight that climate change has had some positive impacts  on agriculture, such as in the UK and France, but the US would become less suitable. 

Long-term goals

In the long-term she warned that for more sustainable production the planet needs to look at yield improvement, reduced reliance on fertilisers and move to organic farming as well as a change to alternative proteins and to diversify grain types. There also needed to be a reduction of food waste at household level. 

The impact of the war in Ukraine on the food and drink industry has coincided with a 6.7% rise in inflation, the largest since 2011.

Chief executive of the Food and Drink Federation Karen Betts said: “The war in Ukraine, with both Ukraine and Russia important suppliers of commodities like wheat and food oils, as well as energy and fertiliser, has made the situation worse.

"Our sector is, in particular, impacted by the significant rises in energy costs seen this year – with over 60% of food and drink manufacturers reporting energy price rises are impacting their operations. Meanwhile, wages are rising too with labour shortages right across our sector taking hold.” 

 

 

Related topics: Supply Chain

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