The impact on global food prices of Russia’s invasion of Ukraine is going to be far more severe as sanctions on Russia get increasingly tighter.
While world grain prices are already rising because of the conflict, a bigger impact seems likely to be soaring oil and fuel prices, which means more expensive transport of everything, including food and its agricultural components.
Financial sanctions are already limiting Russia’s global trade, and now the United States and some of its allies are imposing an embargo on Russian oil. This caused an immediate rise in oil prices, and it seems likely that more is to come.
Fertiliser prices are going up, too, with Russia the world’s largest exporter by value of fertiliser.
Agricultural economist Wandile Sihlobo has noted concerns about the war’s effects on stocks and prices of wheat, maize and sunflower oil, of which Russia and Ukraine are major producers. To make things worse, China has warned that it could have its worst-ever wheat crop.
Higher wheat prices herald more expensive bread, while higher maize and soya prices will push up the cost of animal and poultry feed.
And then there’s the price of petrol, which FNB Agriculture has identified as the main driver of food inflation at the moment. The price has just risen to more than R21/litre in South Africa. Further steep rises are ahead, with one commentator seeing a worst case scenario of R40/litre if things get really bad.
At the end of last year it looked like food price inflation might have been slowing down, however, the invasion of Ukraine has ensured that the prospects for 2022 are very different.