“Supply squeeze across many regions of the world”

Russia and Ukraine currently account for more than a quarter of global wheat exports. The price of wheat has soared as a result of the war in Ukraine and the sanctions against Russia. Is a major supply squeeze on the way?

Florian Zabel: The current price rises are mainly a consequence of the uncertainties in the agricultural markets due to the war in Ukraine. There is a great deal of uncertainty as to how severe the yield losses will be as a result of the war, and also how badly the infrastructure needed to export agricultural commodities will be affected. Many countries therefore tend to reduce their export volumes in order to secure food supplies for their own population. But doing so drives prices up even higher. Major exporting countries, including Ukraine and Russia, have already announced export restrictions.

Ukraine and Russia do play a key role in world food supply, don’t they?

Zabel: The two countries are very important producers of wheat, but also of corn, barley, and sunflower oil, among others. In fact, Ukraine provides almost 50 percent of the world’s supply of sunflower oil. In the case of wheat, it’s actually winter wheat that accounts for 91 percent of the total wheat area. The crop was already sown last fall and is now already in the fields, but may not be fertilized sufficiently over the next few months until maturity due to a lack of labor, fuel, or fertilizer. While this would not cause a complete crop failure, the lack of fertilizer application, such as nitrogen, will affect both the quality of the yield and the quantity. It’s impossible to say right now whether or not the harvest will be able to take place smoothly in the summer. For many other arable crops for which the seed is available, the next few weeks will determine whether it can be sown or not. Obviously, if you don’t sow a crop, you can’t harvest it. The longer the war continues, the greater the damage will be. The actual impacts cannot yet be fully predicted. We do not know how the war, the scale of the destruction, or, in Russia’s case, the sanctions will affect trade.

Why are the markets already reacting with such extreme swings?

These are complex systems, and they are also influenced by the rise in energy costs. Coupled with this are the prices for fertilizers, which has itself become significantly more expensive. That’s because energy is required to produce fertilizers. Moreover, Russia and Belarus are among the world’s biggest exporters of fertilizers, with a combined share of 36 percent. Without fertilizers such as nitrogen, phosphorus, or potassium, the agricultural sector is unable to produce high yields, which is a key factor for the harvest. We therefore expect lower yields in many regions of the world this year. Moreover, during the Covid-19 pandemic, global demand has risen sharply and many foodstuffs have already become significantly more expensive, also because supply chains were partly disrupted. The further price increase brought by the war now makes it now all the more severe for some regions.

Wheat is important worldwide, both as food and as animal feed. Which regions are currently the most affected?

The countries most directly affected are those that rely on imports from Russia and Ukraine. These include countries in North Africa and Asia. Wheat is a staple crop across North Africa. It is crucial for food security there. For comparison, 70 percent of cereals in Germany are used as animal feed. In countries across North Africa, things are different. For people in poor countries, even small price increases like those we have been seeing for some time now, are a huge problem.

Egypt is the world’s largest importer of wheat. What is the current situation there?

In Egypt, people’s everyday food supply depends heavily on wheat—it is the main staple food there. The purchasing power of the population as a whole is not particularly high. At the same time, the share of private household consumption expenditure on food is very high in Africa. People spend about 70 percent of their income on food there, compared with only 10 percent in Germany. So higher food prices do not affect us as much in comparison. Even before the Arab Spring, food prices had risen sharply in North Africa, especially for staple foods like bread. Since then, there has been speculation about possible relationships.

Do you expect we will see unrest in completely different regions of the world driven by similar mechanisms as a result of the Ukraine war?

It is possible that food could be used as a weapon to increase the migration pressure on Europe. We are already seeing the effects through prices. Much will depend on how the war develops and what measures other countries take, and whether they can offer substitute supplies. The EU has already announced plans to increase its agricultural production, for example by allowing the cultivation of fallow land that had been designated as ecological priority areas. In addition, more flexible biofuel quotas and a reduction in meat consumption as well as a reduction in food waste would make it possible to use more agricultural raw materials as direct food and thus make them available to these countries.

How big will the impact be in this country?

Overall, Germany has a high level of self-sufficiency in food production, with the exception of vegetables and fruit, so we are relatively independent of imports from Russia and Ukraine. Nevertheless, we must expect higher food prices.

Could price rises lead to certain food production shifting to other regions of the world in the medium term because cultivation suddenly becomes more lucrative there?

In principle, global trade ensures that any yield declines or failures in one region can be compensated. So far, there has never been a huge shortfall in all of the world’s major growing regions at the same time. Rising prices do make it more attractive to increase production and export more. However, one of our studies showed that this often goes hand in hand with agricultural expansion, which puts even greater pressure on natural ecosystems. The tropics are particularly at risk in that context. Agricultural expansion has been happening there for years. Unfortunately, however, these are the very same regions that have a high level of biodiversity. The pressure on these areas could increase even further as a result of current developments.

That might not be the only danger. The Russian president has not ruled out the use of nuclear weapons. In a study you conducted on the India/Pakistan region, you calculated that even a limited nuclear strike would have dramatic global effects in addition to the regional devastation. What would we have to expect in a case like that?

Our crop growth models indicate that even limited nuclear strikes would have dangerous global effects on food security far beyond the region that is fatally hit. Similar to what happens after large volcanic eruptions, even a limited nuclear strike would likely see a rapid cooling in global temperatures. Fires across major cities would cause aerosols to reach high layers of the atmosphere, disperse globally, and reflect solar radiation. Temperatures would drop as a result—we would be in what’s known as a nuclear winter. Crop yields in the following years would consequently be over 10 percent lower on a global average. That is another reason why we should be thinking much more intensely about nuclear disarmament.

Even without such horrific scenarios, UN Secretary-General António Guterres warns of an impending “hurricane of hunger.” What measures could be taken to help prevent humanitarian crises worldwide?

Our research has shown that, irrespective of the current war, it is essential to further intensify agriculture, and to do so sustainably, in order to curb world hunger. Agriculture is very inefficient in many regions of the world in the way it makes use of limited resources such as land, soil, fertilizers, and water. Accordingly, we need to make agriculture more efficient. In Germany, we could become even more efficient and also more sustainable by using modern technology, among other things, without reducing agricultural production. Expanding grain storage facilities could also help balance out price fluctuations and reduce vulnerability to such shocks.

How can solutions to such issues be delivered globally?

There are a lot of complex interrelationships. We are currently experiencing an energy crisis and a food crisis. Those two are interrelated as well. Besides the issue of energy supplies, geostrategic considerations must also be brought into the food supply question in order to reduce dependencies. So we should clearly accelerate the expansion of renewable energies. But this must not be done at the expense of food production, because we may well end up seeing a supply squeeze there. Therefore, what we recommend are solutions that consider energy production and agriculture together and allow them to be used on the same land—such as through wind power and agrivoltaics. Such systems serve climate protection and can simultaneously increase resilience to climate change. At the same time, by increasing land-use efficiency, they reduce pressure on natural ecosystems worldwide, allowing forests and biodiversity to recover. Overall, the goal must be to achieve food security alongside energy security, climate protection, and biodiversity conservation. And this is possible.

Interview: Hubert Filser

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PD Dr. Florian Zabel is a geographer in the Hydrology and Remote Sensing research and teaching unit at LMU. He conducts research on global agriculture and food security in the context of the Sustainable Development Goals.