After Russia said on Monday it would end the Black Sea Grain Initiative – a deal to provide safe export routes for about 20 per cent of the world’s grain – governments have been trying to assess the impact on world hunger.
Ukraine, sometimes called the breadbasket of Europe, is a major producer of sunflower oil, wheat and maize, but when Russia invaded in February 2022, turning much of the agriculturally rich east of the country into a warzone, wheat prices were hit hardest amid a general surge in global food prices.
Wheat futures jumped 60 per cent within a week, but by July the UN, Turkey, Russia and Ukraine had signed a deal to allow food to be exported safely through the Russian navy-controlled Black Sea from three Ukrainian ports, Chornomorsk, Odesa and Yuzhnyi.
By August, prices had stabilised but not before delivering a harsh blow to the finances of some of the poorest countries in the world.
Wheat prices have remained high as countries compete to secure new sources of the grain.
For Gulf nations – and major oil exporters such as Iraq, which have seen elevated oil prices for the past two years – the impact of the wheat price rises are manageable.
But for net energy importers including Syria, Tunisia and Jordan, coming after the economic shock of Covid-19, the economic stress was acute.
It was a similar tale for Egypt, which used to import 25 per cent of its wheat from Ukraine, and Lebanon, which used to import 80 per cent from the conflict-hit country.
In Tunisia, the war's impact on livelihoods has been very visible. In a study conducted by UN Habitat and released in May, Tunisia was said to import 93 per cent of its soft wheat and 40 per cent of its durum wheat in the period between 2018 and 2021. Most of these imports were from Russia or Ukraine at the war's onset.
Experts say that grain, fertilisers and energy costs all increased following the war, leading to an explosion of subsidy allocations that the government provides to support the local market and prevent it from falling apart.
This subsidy increase in turn worsened a budget deficit and the shrinking of public funds for other vital sectors such as health, education and investment.
Stabilising food prices
Last year, two things contributed to the stabilisation of prices: the Black Sea deal, which allowed for around 30 million tonnes of food to be moved from Ukraine’s ports, and a surge in production in wheat-growing areas as producers took advantage of high prices.
Those positive factors are now in doubt, not just because of the deal ending, but because record breaking temperatures will soon have an impact on harvests. Australia, where wheat exports surged last year, will see a slight decline this year.
So the picture is mixed when it comes to the struggles of import dependent countries.
Lebanon, a country suffering from a prolonged economic crisis that has rendered the vast majority of its population impoverished and left nearly 50 per cent food insecure, continues to rely on Ukraine’s wheat exports.
More than 500 days into the war, more than half of Lebanon’s wheat continues to be imported from the eastern European country.
Experts and rights organisations warn that the failure to renew the Black Sea Grain Initiative would further deepen food insecurity in the troubled country and have devastating consequences on a population already struggling to receive even basic goods and services.
“Lebanon is now the country with the highest food price inflation in the world, at a staggering 352 per cent,” Jennifer Moorehead, Save the Children’s country director in Lebanon, warned in a report on Monday.
“Millions of people in Lebanon have been classified as experiencing crisis or emergency levels of food consumption gaps.”
Lebanon has suffered from chronic shortages of wheat and flour since its economic crisis began in 2019.
The interruption in wheat supply caused by the war in Ukraine exacerbated bread shortages and drove prices up at a time when soaring inflation, paired with a plunge in the value of the local currency, has debilitated the purchasing power of Lebanon’s citizens.
Unable to store wheat long term due to the destruction of its main wheat silos in the Beirut port explosion on August 4, 2020, the small state has become reliant on regular wheat shipments, financed by the World Bank, to keep it afloat.
The situation remains fragile in Egypt, the world’s largest wheat importer, annually buying around 10 million tonnes on world markets.
On the eve of the outbreak of the Russia-Ukraine war, Egypt procured the vast majority of its wheat imports from the two warring countries. Egypt’s Supply Minister Ali Moselhy said in May that the nation’s reserves of wheat were sufficient for about six months.
A large segment of Egypt’s imported and locally grown wheat is used to make bread, a main staple for most Egyptians. At least 70 million of its 105 million people are entitled to heavily subsidised bread available on state-issued food cards, set aside for those with limited incomes.
A loaf of the local flat variety sells to card holders for 0.05 pounds. A slightly larger and better loaf sells for 10 times as much on the free market. The availability of bread in Egypt is commonly used as a reference point for how well a government is performing, given the political sensitivity linked to it.
With a rapidly growing population and a foreign currency crunch, Egypt has expanded the growing of local wheat and adopted legislation obliging farmers to sell to the government a percentage of their harvest.
But with water shortages looming – as in much of the region – and a lingering dispute with neighbouring Ethiopia over the massive Nile dam that Addis Ababa is intent on building, there are question marks over how sustainable this is.
Iraq's short-term relief
While global markets adjust, one outlier is Iraq, which is unlikely to be affected by the collapse of the grain deal as the country has sufficient strategic reserves of wheat from its procurement of local grain from farmers this season.
After years of drought, Iraq saw a good harvest of wheat in its 2022-2023 season, thanks to heavy and unexpected rains.
According to the chairman of the Iraqi Grain Board Haider Nouri, the season was the “most successful one” with 5.194 million tonnes of wheat purchased.
“We have reached self-sufficiency that exceeds all expectations,” Mr Nouri said in a statement on Monday.
In previous years and amid severe drought, Iraq cut the amount of irrigated farmland and imposed wheat quotas on farmers, leading to a significantly higher import bill.
The country went through severe drought the past two seasons due to lack or rains and dwindling flows of the two main rivers, the Tigris and Euphrates, mainly as a result of upstream dams in Turkey and Iran, as well as poor water management.
Additional reporting by Ghaya Ben Mbarek, Hamza Hendawi and Sinan Mahmoud.