How Russia Is Both Exacerbating and Benefiting From a Looming Food Crisis
It appears that Russia is deliberately trying to exacerbate a looming global food crisis in its latest attacks on Ukraine. On Sunday Russia struck Kyiv and Mykolayiv with airstrikes. According to reporting from Simon Shuster of Time magazine, the Russians hit a Kyiv factory that works on grain-transport railway cars. In Mykolayiv, the Russians hit one of the largest grain storage/shipment facilities in Ukraine. Russian propagandists loudly proclaimed that the targets of the strikes in Kyiv were tanks donated by Western countries, but they are less vocal about their strikes on critical grain storage and transport facilities in Ukraine. Hitting Ukraine’s wheat industry does not just hurt Ukraine’s economy and make more poor people hungry around the world, it drives up the price of Russia’s grain exports. Russia is already trying to use high food prices as an argument against sanctions, even as it makes the situation worse.
Ukraine is a major exporter of grain, especially wheat and seeds used for seed oil. Russia’s blockade of Ukrainian ports and disruption of the whole country has effectively removed 20 percent of the world’s expected wheat exports from the market. Most Ukrainian grain was transported to the ports on the Black Sea coast and then exported by ship; now that is no longer possible. Ukraine lacks sufficient rail capacity to ship all the grain to Europe over land. I spoke to one expert on the subject last week, and she estimated that it would take Ukraine 18 months to two years to export all its grain in storage via rail. With Russia’s strike on the Kyiv plant that works with grain export train cars this capacity is reduced further. Additionally, if the existing harvested grains aren’t transported out of Ukraine this year, then Ukrainian farmers will have nowhere to store their harvest in the fall, and no incentive to plant new grains for the next year. Agriculture is responsible for about 9 percent of Ukraine’s GDP and provides 18 percent of all the jobs in Ukraine. Shutting this sector down would be a huge blow to Ukraine’s economy and a great victory in Russia’s war of attrition.
A Russian attempt to prevent the export of Ukraine’s grain might also be a partial explanation for Russia’s repeated attacks on the Dniester estuary bridge. This bridge has a rail line and a roadway, and Russia has attacked it with cruise missiles four times since the start of expanded hostilities. This repeated fixation on this bridge was a bit puzzling for me. On the one hand, in principle destroying it would isolate the Budjak region of Ukraine (the southwest corner of Ukraine) from the rest of the country. But there is another way to drive into the region, by taking the M15 highway from Odesa. This road briefly passes through Moldova but the countries have worked out an arrangement where you can pass through Moldova without going through customs. This road was recently totally resurfaced and it is much better than the one that crosses the Dniester bridge.
Perhaps if Russia was planning to conduct some kind of operation in the Budjak region and make it a new “Peoples’ Republic,” attacking the bridge would make military sense. Russia actually tried something like this in March 2015 with the “People’s Rada of Bessarabia,” (another name for Budjak) but there is no indication that something like this is in the cards again, and Russia lacks the amphibious capacity to capture this territory outright. However, if Russia is trying to prevent the use of the rail line that runs from Odesa’s port to Romania (and the Danube) in order to disrupt grain exports, the repeated strikes make more sense. The only other train lines from Odesa that do not have to take the long way around into Europe through Western Ukraine head through the Russian-influenced Transdnestrian breakaway “republic” in Moldova, rail lines which Russia could probably disrupt or destroy with ease—or just prevent their use entirely.
In poorer countries an increase in the price of wheat and other grains can have a serious negative impact on hunger and social stability. And this is not just about wheat—Ukraine was the No. 1 exporter of sunflower oil in the world, and this is a key ingredient in many baby formulas, driving up the price for that sensitive food. Russia is already something of an international pariah, at least in the West. Deliberately increasing the global food crisis could make Russia more despised in the Third World, where some of the bastions of pro-Russian sentiment exist. Russian propaganda has been trying to blame the emerging food crisis not on Russian actions but on the sanctions against Russia. The Russian Ministry of Foreign Affairs released a lie-laden “fact sheet” attempting to deflect blame for the global food and energy crisis, stating that it was a long time coming and that the actual crisis is in food transport, not in total available food. Among a slew of deceptive statements, the MFA also blames the West for conducting “Bolshevik-style crop seizures” by helping to transport Ukrainian grain out by rail.
A few days ago Putin even felt the need to address the grain issue directly in an interview with a Russian TV station. When asked about Russia blocking Ukrainian food exports Putin responded that it was a “bluff”:
“The world produces about 800 million tonnes of grain, wheat per year. Now we are being told that Ukraine is ready to export 20 million tonnes. So, 20 million tonnes out of 800 million tonnes amounts to 2.5 percent. But if we proceed from the fact that wheat accounts for merely 20 percent of all food products in the world – and this is the case, this is not our data, it comes from the UN – this means that these 20 million tonnes of Ukrainian wheat are just 0.5 percent, practically nothing.”
First of all, even assuming that Putin’s figures are correct, notice he focuses on total wheat production, rather than total exports. Ukraine plays an important role in how much grain is actually tradeable and shippable every year—which is why the price went up upon Russia’s invasion and went down for a bit when credulous traders heard Putin guaranteeing that Ukrainian grain could be exported safely. Second, Putin is glossing over that there are all sorts of knock-on effects of this kinda disruption in Ukrainian food exports, which combine to make a massive global-scale disruption. As wheat prices went up, India banned wheat exports. India is a major producer of wheat, though not in the top 10 exporters. However, this attempt to control local wheat prices has further negative effects, not only in further restricting global wheat supplies but in driving down the profits of Indian farmers and decreasing the capacity of the global market to adjust its production to make up for Ukrainian wheat. Indian grain producers were planning to boost their production and exports to take advantage of high prices, but now that is not possible. Ghana and Uganda have also banned grain exports. Again, they are not major exporters, but this will have further knock-on effects.
In the same interview Putin mendaciously declared that “the problem of shipping grain out of Ukraine does not really exist.” He said it could be shipped out of Ukrainian ports if Ukraine would clear the mines they placed there to deter Russian amphibious operations. Or, that it was possible to export them via rail (this came just days before the Russian strikes on Ukrainian grain infrastructure). He even suggested that they could be shipped via Belarus to ports in the Baltic, but this of course would necessitate, Putin asserted, dropping sanctions against Belarus. Belarus, remember, is actively involved in the war, allowing Russian troops to pass through and receive supplies and conduct airstrikes from Belarusian territory. The Russian rapists and murders who hit Bucha all came through Belarus.
While Putin is claiming there is no problem even while he actively makes the problem worse, Russian grain exports are having a bumper year. Russia is the biggest grain exporter, and this year Russian agribusiness will probably reap record profits. Russia is not only exporting its own grain this year, it is looting captured Ukrainian grain and selling that to foreign buyers. When there is hunger and social instability in poorer countries this year and next Russian propagandists will blame sanctions, or even say that if the West really cared about food prices it would force Ukraine to surrender or at least stop giving Ukraine the weapons it needs to hold out.
The world should have paid more attention to Russia’s threat to Ukraine before the war. Ukraine is globally important not just for politics, but also for calories. Russia is attacking the world’s food supply through its attack on Ukraine, but will try to use surging global food prices to reap profits and get sanctions dropped.
