Record Food Prices Could Leap 22% More on Ukraine War, UN Warns

(Bloomberg) — Record-high global food costs could surge another 22% as Russia’s assault on Ukraine stifles trade and slashes future harvests, the United Nations warned.

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A report from the agency’s Food and Agriculture Organization on Friday shows the far-reaching fallout of the war on the world’s food system, with the impact set to stretch well beyond the next season. Ukraine and Russia together account for more than a tenth of all calories traded globally, and those flows have been stifled since the conflict erupted late last month.

Soaring production costs means other countries will only partly be able to compensate for the “sudden and steep reduction” in Black Sea grain and sunflower exports in the coming 2022-23 season, FAO said. That will likely push international food and feed prices 22% higher and a “considerable” supply gap will linger going forward if the war persists and energy stays expensive.

“The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally,” Qu Dongyu, FAO director general, said in a separate statement, adding hunger could also rise in Ukraine. “International food and input prices are already high and volatile.”

Read more: The world’s next food emergency is here as war componds hunger.

As many as 13.1 million more people worldwide could go undernourished next season in a worst-case scenario. That assumes a 25-million-ton drop in Ukraine and Russia’s combined wheat and corn exports, and a 3-million-ton drop in oilseeds. A more moderate supply shock could still mean about 8 million additional people facing hunger.

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The war is likely to leave 20% to 30% of Ukraine’s crop area for the 2022 season unplanted or unharvested, the FAO estimates. Winter grains such as wheat were planted months ago, but farmers would normally begin sowing corn and sunflowers in a few weeks time.

“Massive population displacement” has meant worker shortages, Dongyu said. Plus, some fields are mired in conflict zones and producers are likely to have trouble spreading fertilizer and chemicals.

Russian production isn’t likely to see major impacts in the near-term, but farm income could be depressed by the effects of international sanctions, weighing on future harvests. The war has also spurred a wave of protectionism as governments seek to ensure domestic food supplies. FAO urged nations to keep trade flowing, emphasizing such trade barriers could exacerbate soaring prices on international markets.

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