Columbia University’s Research Director Puma and Associate Professor Konar wrote a NYT opinion regarding Putin’s War against Ukraine. Specifically, they expressed concerns about this war leading to increased food prices, a disrupted global food chain, and significantly impacted food export and cost for the poorer nations dependent on them. While these statements are factually true, they do not go far enough in describing what is, and will happen.
Note: Putin’s Russia invaded Ukraine on 24 February 2022, and I drafted this post two days later. I verified everything is still true on 17 March, but while “on-the-ground” conditions can change at any minute, the overall manifestation and impact of war rarely changes. My points below are valid even should circumstances change.
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Critical Supply Chain Disruption
Fragile Global Systems
The world has a global food and supply chain that quietly works to plant, harvest, manufacture, package and transport food, arts, crafts, and raw materials to and from all countries. Like blood that passes through our veins and arteries to various parts of our body, keeping every part fed and functioning. This global trade structure is the lifeblood of our current level of civilization and generally garners minimal thought or review by anyone other than those specialists who fuss about it and worry about its frailties. When the supply chain does not work, then everyone knows it is a problem.
I can number the major, known disruptions to our supply chains, and while these are usually felt one or two at a time, unfortunately, right now we are experiencing nearly all of them at once.
- Limited and finite resources
- Climate change and natural disasters
- Pandemic
- War
- Politics
Limited and Finite Resources
We have been experiencing the costs and shortages of limited, and finite resources. This has been felt primarily in the energy sector with oil and natural gas, but also in manufacturing sectors using semiconductor chips. The results have been manufacturing disruptions and higher prices for items using those resources, especially: heating oil, petroleum products, computer systems, nearly all vehicles, mobile devices, manufacturing and home appliances, medical devices, etc.
We have already felt reductions due to “rare-earth” mining difficulties, then came pandemic labor shortages, but now even higher prices and less supply will be caused by Putin’s War.
- Russia supplies 45% of the global rare-earth palladium (eandt), used for producing catalytic converters, smartphones, digital cameras, hard drives, fluorescent and LED lights, computer monitors, flat-screen TVs, and other electronic displays.
- Ukraine is the third-largest producer of nickel and aluminum, used in battery and EV components.
- Ukraine produces ~70% global neon gas, used in semiconductor chips manufacturing.
Thus, Putin’s war disruption of the global supply chain affects food, for nearly every aspect of farming relies on machinery, computers, transportation, mobile devices, etc. Without that equipment the agriculture sector will experience losses, delays to markets, and higher costs.
Climate Change
It was reported that Canada had a terrible 2021 maple syrup harvest, and had to dip into their reserves to meet global demand. But the actual problem is not just one bad year, but that climate change is causing a significant change in where maple trees can best grow, and it appears to be heading north.
Climate change has brought drought in some places, floods in other places, unusual cold snaps and blizzards, and in some places unusual storms and hurricanes. All of this affects food production, not just for one season, but often for two seasons at a minimum, since time is required for food to be planted, grown and harvested.
Pandemic Labor
With the pandemic, millions of people lost their jobs due to governmental and public health self-isolation requirements. As people stayed home, jobs were further affected as the pandemic labor shortage rippled through the economy.
But also food production started slowing down as well, food could not be harvested, shipped, or processed. Food, stuck somewhere in the supply chain, may have been ready for shipping but could not be sent, as all transportation was affected: truckers, warehouse employees, sailors, longshoremen, railroad employees, bus drivers, pilots, etc. All of this led to increased prices as well as limited supply, compounded by fear-based, panic buying.
And Then Putin’s War
The bottom line is, just as we thought things were starting to head back to a small sense of “normal,” this war pops up and shatters an already fragile global supply chain. The reason this war in particular is so devastating to the global supply chain is because of what Russia, Belarus, and Ukraine export.
[Oklahoma agriculture experts discuss impacts of war in Ukraine]
Putin’s War in Ukraine
“Leave or Fight” Disrupts Logistics
As the Ukraine population splits and half leaves their country toward safety, the remaining half are taking up arms against the invading Russian (and Belarusian?) soldiers; few remain to transport food to stores, to ships, or even to farm. So the effect is another disruption to the logistical systems that need to be in place to feed Ukraine’s own population.
Civilization, and its logistic systems, fracture during war and it takes years to recover from, if it recovers. Kudos to those Ukrainians who are still running the trains, tending the farms, and providing food to the people; and a cheer to all the farmers using their tractors to haul away military vehicles.
Ukraine, Russia, + Belarus Food Exports
Worldwide it is estimated that ~855M people already are suffering from starvation, hunger, or food insecurity. Now with Putin’s War, even more disruption is expected as social and governmental support agencies that subsidize and distribute food, will not be able to get food for or to their subsistence populations. Nor are they likely to afford or absorb rising costs for that food.
So the disruption of grain, oil, and cereal distribution, according to the Financial Times (FT), will have a heavy impact on food availability and costs in many countries:
- Lebanon receives 50% of its wheat consumption from Ukraine (NYT).
- Egypt receives 86% (FT)
- Libya receives 43% (NYT).
- Turkey receives 75% (FT)
- Yemen receives 22% (NYT).
- Bangladesh receives 21% (NYT).
CNBC calls Ukraine the breadbasket of Europe, so any disruption in their food production will domino, affecting countries across Europe, Asia, and Africa. For example, NYT reports that Ukraine and Russia are critical exporters of key cereals.
- Ukraine and Russia accounted for 19% of global corn (NYT).
- Ukraine provides 80% of global sunflower seeds + seed oil last year (NYT).
- Russia and Ukraine are big suppliers of commodities like barley (CNBC)
TRTWorld writes, conflict has perpetually been a leading factor of food insecurity across the world. The aftermath of war is always the same, as Reuters points out, the richer countries will do okay as they will just pay more and survive on limited food selection, while the poorer countries will suffer because they have many people already at the subsistence point.
Food and Beverage Companies
FoodNavigator writes: Food and beverage companies temporarily suspend their operations in Ukraine following Russia’s invasion. The list includes: Coca Cola, MacDonalds, Pizza Hut, KFC, and Starbucks. Keep in mind many are franchise-based businesses, so Russian-owned stores may still be operating.
Other food and beverage companies are: bracing for the long-term economic impact that skyrocketing commodity prices and potential sanctions will have on their businesses. You may ask, why are they bracing? Because Ukraine and Russia also exports metals (aluminum and steel), and these metals are used to make canned food (think soups, pet food) and aluminum-canned drinks (beer, soda).
Fertilizer, Energy + Fuel
FarmPolicyNews has provided a deep dive into how businesses are trying to increase fertilizer production, as Russia and Belarus are also major producers of fertilizer, and Russia is known for its distribution of natural gas and oil.
- Russia exports 18% of world’s potash, 20% of ammonia and 15% of urea (NPR).
- Natural gas is used in making nitrogen fertilizers.
Farmers are already rushing about, stocking up on fertilizers due to the expected, and dramatic, increase in costs. This has the potential to be a longer term issue, and will affect the price of food unless the government intervenes to ”buy the difference.”
On 8 March President Biden announced that the USA would not import anymore of the limited gas or oil imported from Russia. But the USA does not use that much from Russia, so while global disruption caused by Putin’s War means costs at the pump will go up, it reflects global supply worries and greed, and not what USA imports. If Europeans do the same, and cut imports, this will result in limited supply, large price increases, and will affect transportation everywhere.
NPR adds that concerns are also for the people rushing through borders into other countries, concerns for food and energy, especially as Russia started threatening nuclear power plants in Ukraine. They write, humanitarian groups fear that severed supply chains at the Ukrainian border and within the nation could lead to food and fuel shortages.
Global Shortages + Impacts
So here is what we need to be prepared for, all over the world.
Global Shortage
Limited resources, climate change, worldwide pandemic, and Putin’s War have combined to cause an unprecedented global shortage in major components of our modern world. These shortages have reduced availability of raw materials and processed supplies, affecting the broad manufacturing segment, which in turn means we consumers will experience loss, shortages, and high costs. This is the domino effect of our global logistics and the related supply chains.
Shortages have been, and are expected in these broad areas:
- Semiconductors
- Metals and rare-earth materials
- Medicines (<- FDA list of Rx shortages)
- Food and Drinks
- Fertilizer
- Baby formula
- Gasoline + Oil + Natural Gas
Our current level of civilization requires a smooth, global supply system operating with proper inputs and outputs in order to meet the need of each country.
Global Price Increases
There are many reporters and analysts expressing concerns over the possibility of raising food and raw material costs on a global scale, according to Vox. They stated that: even before the conflict, global food prices were already at their highest point since 2011, thanks to volatile climate conditions like droughts and overly heavy rainfall, as well as the broader supply chain disruptions created by Covid-19. In this situation, rich countries can surf the problems (although the poor in their countries will suffer), while the poor countries drown.
On 16 March, WAPO is reporting that the Middle East is now experiencing panic buying as they anticipate severe food supply disruptions: in countries including Egypt, Syria and Lebanon, which rely on Ukraine and Russia for products such as wheat and vegetable oil, prices are soaring and supplies are vanishing.
Even USA Will Feel Disruptions
USDA Secretary Tom Vilsack has been quoted as saying that he thinks the USA will be isolated from harm, but everyone is keeping their eyes on Putin as he is escalating this war to frightening levels. But, I am more realistic, and believe Putin’s War tips the dominos globally, including in the USA.
According to FoodNavigator: Buyers of US wheat and other grain commodities could find themselves in a “Katy bar the door” moment if growing conditions in the Midwest don’t improve and if buyers who typically source from Russia and Ukraine are forced by the escalating war to find supplies elsewhere, including North America.
The WashingtonPost writes that Russia’s invasion of Ukraine: will likely ratchet American food prices even higher and that wheat and seed oil exports could be dramatically impacted, and it could take years before a return to normalcy because of disrupted planting schedules.
Reasonable predictions, as Putin’s War continues, include:
- Increasing farm input costs (oil, fertilizer, feed additives), resulting in higher food costs.
- Increasing oil, gas, diesel costs leading to higher processing and transportation costs, leading to higher retail costs.
- Limited raw materials (metals, rare earth materials, chemicals), leading to manufacturing impacts, product shortages, limited retail choices and higher costs.
- Savings and investments falling due to war and shortages, leading to personal financial losses.
- TheHill: Higher energy and food prices and deeper supply chain bottlenecks could put pressure on inflation and force the Fed to accelerate its pending series of rate hikes.
What Consumers Need to Do Now
I am not an expert in any of this, but one only needs common sense to figure out we should not let our guard down for we are not ”back to normal.” This is not a call to become a “doomsday prepper”, as truthfully the USA is not experiencing anything like what Ukraine or its neighbors are living under. Rather, this is a call to become an informed and prepared consumer.
Let me be very clear on this, in the USA we have been and will continue to experience shortages and higher costs as an inconvenience, we will not experience it as a major catastrophe, and nothing we experience will compare to living in or near war conditions. So, without fear or panic, and with kind patience, I would start preparing for a 1-2 months of minor supply disruptions, and longer disruptions regarding all things affected by computer chips and rare earth materials.
- Review your medical needs and sty current with your prescriptions (check FDA site) and medical supplies.
- Consider buying now, if you need an electronic-based medical device.
- Store extra canned foods (including pet food) or aluminum-encased drinks that you normally consume.
- If any shelf-stable foods go on-sale AND you regularly eat that food, stock up a little bit.
- Buy wheat-based and sunflower products now, and make sure they are properly stored.
- Fix or replace any major smart appliance, computer, cell phone.
- Shortages already exist with new vehicles, expect used vehicle costs to jump even more, and the wait list for new vehicles to extend out even longer.
- If you have a hybrid vehicle, good for you, but keep your vehicle topped off with gasoline. Now would be a good time to consider that bike or ebike you always wanted.
- If you have natural gas heat or appliances, expect higher energy costs.
- Consider installing solar panels now, if already on your list, and include the inverter + batteries to keep your house powered first before adding to your local electric company’s grid.
- Home gardeners should consider storing a season’s worth of fertilizer.
- Expect shortages/higher costs in: paper products, wheat pasta, dairy, eggs, vegan meats, animal meats, cream cheese, and champaign.
We live in a domino world where problems in one place can easily topple global logistics, and like dominos, topple into every sphere of our lives.
—Patty
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