Miller Magazine Issue: 147 March 2022

120 MARKET ANALYSIS MILLER / march 2022 Russia’s invasion of Ukraine will further disrupt glob- al markets, will have negative consequences for global grain supplies in the short term, and by disrupting natural gas and fertilizer markets, have negative impacts for pro- ducers as they enter a new planting season. This could push up already-high food price inflation, and have se- rious consequences for low-income net-food importing countries, many of which have seen an increase in mal- nourishment rates over the past few years in the face of pandemic disruptions. Military operations could lead to the displacement of 1.5 million to 5 million people in Ukraine, leading to a ma- jor food crisis. As the State of Food Security and Nutrition and Global Report on Food Crisis reports point out, con- flicts remain a key driver of food insecurity in the world. THE RISING ROLE OF THE BLACK SEA IN GLOBAL FOOD SECURITY Over the past 30 years, the Black Sea region has emerged as an important global supplier of grains and oilseeds, including vegetable oils. In the early 1990s, following the breakup of the former Soviet Union, the region was a net importer of grain. Today, Russia and Ukraine exports account for about 12% of total calories traded in the world, and the two countries are among the top five global exporters for many important cereals and oilseeds, including wheat, barley, sunflowers and maize. Ukraine is also an important source of sunflower seed oil, supplying about 50% of the global market. Many importing countries depend even more on these products from Ukraine and Russia. North Africa and the Middle East import over 50% of their cereal needs and a large share of wheat and barley from Ukraine and Rus- sia. Ukraine is an important supplier of maize for the Eu- ropean Union and China, as well as several North African markets including Egypt and Libya. LIKELY SHORT-TERM IMPACTS The crisis will likely have an immediate impact on grain exports from Ukraine and Russia. Most of the wheat and barley crops are harvested in the summer and export- ed during the fall. By February, most wheat, barley and sunflower seed exports are largely completed. Ukraine maize exports typically remain heavy through the spring into the early summer. Most grain flows out of Odessa and other western ports on the Black Sea, far from the occupied areas in the East, but disruptions are looking increasingly likely given Russia’s latest military actions. Military operations could have short- and long-term con- sequences in the capacity to move Ukraine’s crop pro- duction within and beyond its borders, especially if port facilities and railroads are damaged through terrestrial and aerial operations, or cyber-attacks targeting various infrastructures and their management. Looking forward to 2022 crops, the Luhansk and Do- netsk oblasts account for about 5% of Ukraine’s barley production, 8% of wheat production, 9% of sunflower seed production, and a negligible share of maize pro- duction. The occupied areas of Luhansk and Donetsk are in the easternmost part of the oblasts bordering with Russia. However, large areas of production are in other parts of Ukraine that directly border with Russia and Be- larus where Russian troops have also massed: Between