Miller Magazine Issue: 148 April 2022

97 ARTICLE MILLER / APRIL 2022 a lack of an operational railway system. Vessels can still transit through the Turkish Straits, a critical trade juncture through which a large amount of wheat and maize ship- ments pass. Rising insurance premiums for the Black Sea region would exacerbate the already high costs of ship- ping, compounding the costs of food imports. And, whether storage and processing facilities would remain intact and staffed is also still unclear. The Russian ports on the Black Sea are open for now, and no major disruption to agricultural production is ex- pected in the short term. However, the financial sanctions against Russia have caused an important depreciation which, if continued, could undermine productivity and growth and ultimately further elevate agricultural produc- tion costs. Russia is a major player in the global energy market, ac- counting for 18% of global coal exports, 11% of oil, and 10% of gas. Agriculture requires energy through fuel, gas, electricity use, as well as fertilizers, pesticides, and lubricants. Manufac- turing feed ingredients and feedstuffs also require energy. The current conflict has caused energy prices to surge, with negative consequences on the agriculture sector. Wheat is a staple food for over 35% of the world’s pop- ulation, and the current conflict could result in a sudden and steep reduction in wheat exports from both Russia and Ukraine. It is still unclear whether other exporters would be able to fill this gap. Wheat inventories are already running low in Canada, and exports from the United States, Argen- tina and other countries are likely to be limited as govern- ment will try to ensure domestic supply. Countries reliant on wheat imports are likely to ramp up levels, adding further pressure on global supplies. Egypt, Turkey, Bangladesh, and Iran are the top global wheat im- porters, buying more than 60% of their wheat from Russia and Ukraine, and all of them have outstanding imports. Leb- anon, Tunisia, Yemen, Libya, and Pakistan also rely heavily on the two countries for their wheat supply. Global maize trade is likely to shrink due to expectations that the export loss from Ukraine will not be filled by other exporters and because of high prices. Export prospects for sunflower oil and other alternative oils also remain uncertain. Major sunflower oil importers, including India, the European Union, China, Iran, and Tur- key, must find other suppliers or other vegetable oils, which could have a spill-over effect on palm, soy, and rapeseed oils, for example. POLICY RECOMMENDATIONS Keep global food and fertilizer trade open. Every effort should be made to protect the production and marketing activities needed to meet domestic and global demands. Supply chains should keep moving, which means protect- ing standing crops, livestock, food processing infrastruc- ture, and all logistical systems. Find new and more diverse food suppliers. Coun- tries dependent on food imports from Russia and Ukraine should look for alternative suppliers to absorb the shock. They should also rely on existing food stocks and diversi- fy their domestic production to ensure people’s access to healthy diets. Support vulnerable groups, including internally dis- placed people. Governments must expand social safety nets to protect vulnerable people. In Ukraine, international organizations must step in to help reach people in need. Across the globe, many more people would be pushed into poverty and hunger because of the conflict, and we must provide timely and well-targeted social protection programs to them. Avoid ad hoc policy reactions. Before enacting any mea- sures to secure food supply, governments must consider their potential effects on international markets. Reductions in import tariffs or the use of export restrictions could help to resolve individual country food security challenges in the short term, but they would drive up prices on global markets. Strengthen market transparency and dialogue . More transparency and information on global market conditions can help governments and investors make informed de- cisions when agricultural commodity markets are volatile. Initiatives like the G-20’s Agricultural Market Information System (AMIS) increases such transparency by providing objective and timely market assessments.