War in Ukraine: What We Know About The Effects On The Grain and Feed Industries

In the last couple of weeks, Russia escalated its near decade long aggression against Ukraine following its invasion on February 24th. Since then, the war has caused more than 15,000 deaths and over 1.2 million people to be displaced across Europe. Aside from the disastrous humanitarian impacts of the invasion, there have been severe impacts on global agricultural commodity trading. According to industry analysts, UK farmers now face an “existential crisis” that will continue to drive up food prices as grain supplies are disrupted and energy and fertiliser costs reach record highs.

Russia and Ukraine are major suppliers of important agricultural commodities such as wheat, corn, and barley, as well as various fertilisers needed in UK agricultural industries. According to Jo Gilbertson, Head of Fertilisers at the Agricultural Industries Confederation (AIC), nitrogen fertiliser, which secures many crop yields, costs 4-5 times more than it did a year ago. Extreme price increases and supply chain uncertainty signify a difficult future for traders and farmers in the agricultural industry.

Increasing Volatility In An Already Volatile Grain Market

Ukraine is a major exporter of milling wheat and feed grains to the worldwide market, accounting for 30% of global wheat exports. This year, the stakes were higher than ever before, with Russia and Ukraine expecting a 12% increase in global wheat exports. As a result, the impact of the war and its subsequent influence on supply and pricing has been felt across the world. Prices rose by 55% prior to the invasion, as many worried about what could happen. UK farmer Kate Morgan told the BBC that she was quoted £317 per tonne, a £102 increase from the pre-war cost of approximately £215 per tonne.

With such geopolitical uncertainty surrounding the war, the global grain market is expected to remain highly volatile. At the start of the conflict, some Ukrainian suppliers remained optimistic about export levels, with Agritel Manager Olivier Bouillet telling FeedNavigator.com that he expected grain export levels to remain around 19 million tonnes for corn and 9.7 million tonnes for wheat, as they had been since January 2014. However, due to the ongoing conflict, Ukrainian farmers have faced fuel, labour, and fertiliser shortages at a critical time of year, and if nitrogen fertiliser is not applied soon, wheat production in the countries could fall by 12 million tonnes, according to Senior Lecturer in Agriculture, Henry Matthews.

Knock On Effects of Grain Market Volatility on Livestock Feed

The severe volatility of the grain market has undoubtedly had an impact on the livestock feed industry. Russia and Ukraine account for considerable proportions of important components of livestock feed, such as 28% of global wheat exports, 18% of corn exports, and 30% of barley exports. Global commodity markets are already constrained as some regions struggle with drought, rising fertiliser costs, and declining yields and acreage.

According to research conducted by the Ukraine Institute of Agrarian Economy, practically all poultry, pork, egg, and beef producers in Ukraine are also suffering losses due to exceptionally high feed grain prices. British pig farmers have also warned the industry could collapse as feed prices have already risen by 50% in a week. Consequently, consumers can expect to pay higher prices as the National Pig Association (NPA) has already urged retailers to pay more for pork.

Looking to the Future

Dr. John Rich, Chairman of the MHP, stated that the current situation is on a knife edge, with the next several weeks important for sowing wheat and other crops. MHP can currently sow crops in 2-3 weeks, but with Russian troops advancing by the day and already occupying around 15% of Ukrainian land, this may soon change. With this level of uncertainty surrounding the Russian army’s advancement, the price of wheat, corn, and other commodities is projected to rise significantly further. At a time of spiralling inflation and ongoing supply issues caused by COVID-19, the near future appears bleak for those in the sector.

These are unprecedented and concerning times for all in the world. If you’re feeling particularly stressed or anxious, we’ve put together a list of resources that may provide some help:

• Verywell Mind – how to cope with stress and anxiety caused by the war in Ukraine.
• Michigan Health – How to cope with what’s going on in Ukraine
• WebMD – tips to manage ‘Headline Anxiety’ as Russia invades Ukraine

There are also several ways to support Ukraine. The organisations and foundations listed below are presently taking donations to help those affected by the Ukraine crisis. We suggest donating only to reputable organisation such as those in the list below. Detailed descriptions of the aid provided can be found on their respective websites.

• International Committee of the Red Cross – offering support to people includes emergency assistance such as food, water, and other essential items. They also support hospitals and primary healthcare facilities with medical equipment and emergency preparedness.
• The UN Refugee Agency – providing life-saving protection to families forced to flee their homes.
• Save the Children – planning to deliver lifesaving aid to 3.5 million vulnerable children and their families
• Doctors Without Borders – committed to providing medical humanitarian assistance to people affected by the war no matter who or where they are.
• World Central Kitchen – an organization that deploys chefs directly to disaster areas to provide hot meals to those in need
• Rescue – sending vital supplies to displaced children and families.
• Care – providing aid and recovery, food, water, hygiene kits, psychosocial support, and cash assistance — prioritizing women and girls, families, and the elderly.