Huda Said‏‏


        
<p><strong>Since the beginning of Russian military operations in Ukraine, wheat-importing countries have become concerned about the war’s repercussions for commodity supply chains. They fear a potential disruption of global wheat supply or the politicization of wheat exports by one of the parties to the conflict, given that both Ukraine and Russia are key exporters.</strong></p>



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<p><strong>Russia is the third largest wheat producer in the world with a capacity of 86 million tons, while Ukraine is the world’s ninth largest exporter of wheat with a capacity of 27 million tons. Together, the two countries make up 15 percent of global wheat production and 23 percent of the world’s wheat exports. Ukrainian agriculture, including wheat cultivation, ground to a halt during the war, which has led to a rise in food prices and disruption of the global food supply. As a result, a global food crisis looms large on the horizon.</strong></p>



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<p class="has-vivid-red-color has-text-color"><strong>Strategic Importance</strong></p>



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<p>The war in Ukraine marked a turning point for the political importance of wheat. In recent years, wheat has become increasingly important. It is not only a commodity that ensures food security but also a tool that many countries employ for political power and influence. The Ukrainian crisis consolidated the strategic importance of wheat, for various reasons including:</p>



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<p><strong>1. Monopolization of wheat production:</strong> Five of the world’s wheat producers— China, India, Russia, USA, and the EU—control more than half of global wheat production. These five, alongside new producers such as Australia, Canada, and Ukraine, make up 80 percent of global production. The production and export of this strategic commodity is largely monopolized, which gives wheat-producing countries a tight grip on the market and wheat-consuming countries. Producing countries also use the commodity as a diplomatic tool to achieve certain goals.</p>



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<p><strong>2. Dependence on Russian and Ukrainian wheat:</strong> Russia and Ukraine produce about 55 million tons of wheat annually, comprising more than a quarter of global wheat exports. The largest chunk of these exports are shipped via the Black Sea to different destinations including the Arab world, which is now among the top importers for Russian and Ukrainian wheat. Ukraine is also Europe’s breadbasket. According to several reports, Ukraine exported about 18 million metric tons of wheat in 2020, making it the world’s fifth largest wheat exporter.</p>



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<p>Several EU and developing countries also import Ukrainian oil; both Russia and Ukraine are key sources of oil for many countries.</p>



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<p>Many Arab countries depend primarily on Russian and Ukrainian wheat to cover their needs due to its low price compared to Western wheat, and because of the low shipping cost to Arab markets.</p>



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<p><strong>3. Food security as a priority</strong>: The Ukrainian crisis has brought food security to the forefront after years of focusing on other security and political issues. The Russia-Ukraine war highlights an emerging food crisis produced by the shortage of wheat, an indispensable commodity for many countries. Many countries are facing food insecurity as a result of ongoing political turbulence or direct violence in these countries. The World Food Programme (WFP), which receives 50 percent of its grain supply from Russia and Ukraine, is facing increasing challenges in carrying out its mission to fight food emergencies worldwide. The WFP estimates that more than 800 million people worldwide suffer from hunger, while 44 million others are facing famine conditions.</p>



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<p><strong>4. Prolonged impact of high prices</strong>: The war in Ukraine has led to an increase in the price of wheat and other food supplies due to increased shipping costs on one hand and an expected decline in supply on the other. The restrictions on the food supply chain will drive up prices in other areas, even in countries that do not depend on agricultural imports from Ukraine or Russia. This is because increased fuel prices directly affect food shipping prices, while the decline in fertilizer availability also reduces global food supply.</p>



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<p>Wheat futures contracts are up 16 percent. Should the current crisis continue beyond May, they could increase by at least 20 percent. The price of one ton of wheat has risen to more than $410 USD from $260 USD six months ago. As the war continues, prices will continue to rise, driving up the import costs for wheat-consuming countries.</p>



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<p class="has-vivid-red-color has-text-color"><strong>A Global Power</strong></p>



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<p>The Ukrainian war exposed the politicization of wheat in international relations, particularly with regard to:</p>



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<p><strong>1. Wheat exports as a diplomatic tool for Russia:</strong> Moscow has continued to use wheat as a diplomatic tool in its relations with other countries. This strategy has been employed more in recent years, particularly since Western sanctions were imposed on Russia in 2014 after its annexation of Crimea. Moscow then hit back with sanctions on food imports from Europe and the US and supported local food production instead. As a result, Russia has developed the largest total area of wheat fields in the world and in 2017 became the world’s leading wheat producer, surpassing the US and Canada for the first time and tightening its grip on most Asia and MENA markets. </p>



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<p>Since that time, Russian exports have become a diplomatic-economic tool for Moscow’s international relations. In 2015, Russia partially banned food exports to Turkey, in response to the downing of a Russian fighter jet. Two years after this partial ban was imposed, exports resumed following improved relations between Turkey and Russia, and after Turkey agreed to transfer Russian gas to Europe. In 2019, Ankara became the largest buyer of Russian wheat.</p>



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<p><strong>2. Wheat and foreign support:</strong> This has been a significant feature of Ukrainian politics. Ukraine campaigned for international support in the war by implying to other countries that current developments would extend beyond its borders and affect global food security. This began to play out in reality as Ukrainian agricultural capacity dwindled, since the majority of its highly-productive arable land is located near the eastern part of the country, which is now controlled by the Russian army. This signals a sharp decline in wheat production and a setback for exports due to destruction of critical infrastructure, agriculture equipment, and grain warehouses, in addition to mass displacement of farmers and obstruction of key Black Sea supply routes.</p>



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<p>Although Ukraine planted about 6.5 million hectares of winter wheat for the 2022 harvest season, the actual harvest might be under 4 million hectares because of the ongoing war. Following the closure of Ukrainian ports, farmers are considering a transition to planting crops that are more conducive to local consumption rather than exports. Barva Invest estimates that expected total wheat production will be 16.7 million tons, about half of last year’s production.</p>



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<p><strong>3. An exit strategy: </strong>Moscow has employed wheat as a strategy in handling the isolation it has faced since its intervention in Ukraine. Russia has used wheat to expand its relations and pressure other countries to refrain from supporting the West in the conflict. It has said it is only willing to export food and crops to "friendly countries," using Russian rubles or the currency of the importing country, according to mutually agreed exchange rates. This aims to pressure wheat-importing countries to support Russia in the conflict.</p>



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<p><strong>4. Strengthening international clout:</strong> The Ukrainian war showcased the efforts of some countries in using wheat as a tool to enhance their presence in the international arena and support their economic interests. With Russia amassing its troops near the Ukrainian border, wheat producers around the world started increasing production. India, for example, has expanded its wheat exports and tried to cut deals with countries affected by shortages in Russian and Ukrainian wheat supply. This aligns with India’s strategy in recent years to increase wheat production. In 2021-2022, India added 5.75 million metric tons of wheat to the global wheat trade, almost balancing out the shortage from Ukrainian and Russian wheat.</p>



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<p>Other countries are taking a similar approach: Australia achieved a record rate of wheat production in 2021, indicating potential expansion of wheat exports. South Africa has also expanded its wheat fields in response to the Ukrainian crisis and contributed to increased wheat production outside Ukraine. It is therefore expected that wheat production in 2022 will exceed consumption for the first time in two years.</p>



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<p><strong>5. A propaganda tool:</strong> During the war in Ukraine, wheat has been employed in counterpropaganda between countries. Russia and Ukraine exchanged accusations over the blocking of a ship loaded with Ukrainian wheat that was on its way to Egypt. On 4 April, the Ukrainian embassy in Cairo announced on its official Twitter page that Russian forces in Ukraine had prevented a cargo ship loaded with Ukrainian wheat from reaching Cairo. The Russian embassy in Cairo denied the claims and argued that Ukraine was blocking the flow of ships in Odessa and Chornomorsk. Russia added that its navy works to ensure the free passage of cargo ships and that Ukrainian authorities were preventing the ship’s departure from the port.</p>



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<p class="has-vivid-red-color has-text-color"><strong>Preventing Politicization</strong></p>



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<p>In sum, the increased politicization of wheat in international relations requires global action to protect the supply of food commodities, and particularly wheat, from the objectives of exporting countries. Without collective efforts to ensure continued food supply and cover its costs, wheat-producing countries will further exploit the situation to control wheat-importing countries. This will exacerbate the food crisis worldwide, especially in the MENA region.</p>



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<p>It will be important to utilize alternative pathways for wheat-importing countries to rethink their foreign alliances and domestic policies, strengthen infrastructure, and build new economic coalitions to prevent supply chain disruptions in light of the Ukraine crisis. These measures could include diplomatic solidarity, exchanging expertise and technology for inter-agricultural cooperation, and increasing investment in arable land to increase the production of strategic agricultural crops such as wheat, corn, and rice in order to diversify their breadbasket. Achieving food security will also require developing strong economic blocs to enhance negotiations with other countries and blocs, as well as promoting a culture of self-sufficiency in basic food commodities. This could be achieved through implementing joint Arab projects for strategic food production and creating a strategic reserve of basic commodities, in addition to creating a system for implementing and managing these reserves. Moreover, long-term projects could improve productivity among young farmers and increase focus on research and development.</p>

      

Understanding the Politicization of Wheat During the War in Ukraine