According to the Food and Agricultural Organization (FAO), the war between Ukraine and Russia is likely heading towards causing global food crisis. As per their report, February’s exponential price hike in the agro commodities can eventually cause a limited supply of critical staple crops like wheat, corn, and sunflower. As a result, it can expose several million people to hunger.
After the war broke, the prices of wheat, corn, and cooking oil have increased to an all-time time, along with crude oil being sold for $100 a barrel. It will eventually raise the cost of fertilizers for the farmers and lead to rising prices for staples across the world.
The other factor that can lead to the food crisis is the West sanctioning Russia. Russia and Ukraine are among the top exporters. While being among the top five shippers of wheat, Ukraine is unable continue with the trade. With the export of the commodity on a halt from these two countries, the wheat prices are escalating already.
Ukraine is forced to stop the supply of corn (17 percent of the global export) and sunflower oil (60 percent of the worldwide export). In addition, the suspension of operation at the Ports of Oddesa and Mariupol makes the prices sore for these commodities.
There are also reports of panic buying and stocking the commodities among the traders.
The war has already increased the price of the following in the global market:
- Wheat by 50 percent
- Corn by 25 percent
- Sunflower oil by 35 percent
- Soybean oil by 20 percent.
How Is India Getting Affected?
Though India is not a heavy importer of wheat or corn from the region apart from sunflower oil, the Indian food market will feel the crunch.
The price of fertilizers and cooking oil will surge in India.
India imports 35 percent of the total consumption of fertilizers. In the bid to offer subsidies for the fertilizers, the burden will be passed on to the taxpayers.
Additionally, the fuel and cooking gas prices will increase because India imports 80 percent of its crude oil requirement.
The limited supply of sunflower oil in the ports is already worrying India. Alternative oil sources: palm oil and soybean oil supply are also under pressure. Indonesia, the leading supplier of palm oil, has developed food protectionism. Therefore, it will foresee limited export while ensuring the locals have enough supply while keeping the price under check.
The sunflower oil price that India plans to import from Argentina has increased by 42 percent. According to experts, the increase in freight price will add to the inflation of sunflower oil in the Indian market.
The export demand for wheat and corn has increased, which is moving the price up for the commodities in India. Even before wheat harvesting has started, the MSP has moved up by $0,26 per kg. For corn, the MSP is $0,25 per kg.
It will eventually increase the costs of poultry, grains, and other raw materials in the agricultural sector.
What Experts Say?
The war has opened up a new opportunity for India by increasing its export quantities of the agricultural surplus. It is time India cuts down on the vast carryover inventories like wheat stock, which is three times the mandatory limit, i.e., 7,6 million tonnes.
During these crises, India can export 10 mt wheat this fiscal year. It can hence ensure farmers get better returns from buyers.
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