Through the food system, the Russia-Ukraine war is impacting every one of us. With no end in sight to the impact of COVID-19, business leaders are grappling with the latest reset of ‘new norm’. In recent years, the agriculture and food sector has become more global and interconnected than ever before. It’s a system that has profound benefits, but it’s fragile, relying on geopolitical stability on a scale that far outweighs any other industry given the climate challenges that are emerging.
The ongoing conflict in Eastern Europe is already being felt across food supply chains. Warnings of a potential long-term catastrophe are not overplayed or exaggerated. A global food security emergency is now imminent and it will impact every country on the planet, regardless of how ‘self-sufficient’ that nation or territory appears to be.
Ukraine is a major international player in grain and oil-seed production. Meanwhile, the symbol of much solidarity with Ukrainians – the sunflower – is a vital part of the country’s economy. Ukraine is the world’s top producer of sunflower oil – by a sizable margin. The warmer months for Europe are usually a boom time for Ukraine’s rural communities. At this point, farmers around the country should be reaping the rewards of their work and bringing much-needed revenue into the nation. Tragically, a return to such a successful sector could potentially be decades away as the scars of war – from destroyed machinery and buildings to acres of mined land – are slowly and painfully repaired.
Russia plays a similarly important role in the global food chain, closely following Ukraine in wheat and seed oil production. It’s also a vital component in the world’s much needed use of raw ingredients for fertilizer thanks to its significant reserves of elements including potash, phosphorus and nitrogen. As sanctions bite, we can except a ripple effect in Europe and nations as far afield as Brazil and China.
There’s an argument that every one of us is part of the food system. We all rely on food to survive and this crisis will unquestionably impact each of us, whether that’s witnessing major price hikes at our local grocery store or potentially struggling to access the most basic of foodstuff in our country. Ukraine was the world’s second largest supplier to the UN Food Security Programme, highlighting the real danger that we could soon witness major gaps in food availability, creating an international food security crisis.
For those directly working in or with investments in agriculture, minimizing the impact of the Russia-Ukraine war will be profoundly challenging, but there are some steps that can be taken to alleviate at least some of the pain. The climate crisis had already driven many farmers and producers to think more carefully about their role in helping create a more sustainable planet. The deepening crisis in Ukraine will likely accelerate existing moves towards transformative, regenerative food production systems. Farmers will be exploring how they can reduce inputs like fertiliser into their system and – more radically – rethinking their production portfolio and mix. With animal feed costs increasing, is now the time to consider a move towards plant-based food production or reformulation of existing products with emerging, novel foods?
Digital technology also has a major role to play in helping to tackle the crisis. The sector has been slower to digitalise than many sectors of the global economy, but it now needs to invest more heavily in and think more carefully about the potential game-changing benefits of tools like AI that monitor supply chains and environmental conditions and risks, providing vital advice and assistance on producing more with less.
Political leaders simply accepting the existential issue of climate change has created a more robust, proactive approach to assistance for food producers, setting a platform for them to start to navigate future challenges. But far, far more could be done. The recent move by many nations to cut taxes on energy costs could be adapted for food supplies. The application of tax on food around the world remains patchy and inconsistent and it is incumbent on governments to explore how they can be more agile on taxation, to enable businesses and individuals to avoid unnecessary and, at times, potentially devastating additional costs.
The next few months and years will be some of the most challenging in modern times for the global agri-food sector, but it’s an industry that is central to the success and healthy growth of our world. With a collaborative, proactive approach to the crisis, the industry can and should play its part in mitigating some of the tragic consequences of geopolitical uncertainty.
Both Russia and Ukraine play key roles in the global food supply chain. Industry leaders and businesses with indirect reliance on agriculture should prepare for significant shortages and ripple effects from sanctions.
The deepening crisis in Ukraine will likely accelerate existing moves towards transformative, regenerative food production systems.
The industry has historically been slower than other sectors to embrace digitization and technology. The crisis reinforces the need to invest more heavily in and think more carefully about the potential game-changing benefits of tools like AI.