Russia’s invasion of Ukraine pushes food prices up to record levels

Egypt, Lebanon, Syria and other Middle East importers are already feeling the pinch from soaring grain costs

Already gummed up by supply-chain bottlenecks, skyrocketing freight rates and weather events, markets are bracing for more upheavals as deliveries from Ukraine and Russia turn increasingly complicated and raise the specter of food shortages. BloombergShow less

World food prices jumped more than 12 per cent to record highs in March following Russia’s invasion of Ukraine, the UN said on Friday, stoking fears of hunger across the Middle East and beyond.

The UN Food and Agriculture Organisation's (FAO) food price index warned of sharp price increases for grains, oils and other foodstuffs as exports from agricultural powerhouse Ukraine continue to be affected by the fighting.

The disruption in export flows caused by the February 24 invasion and international sanctions on Moscow have spurred fears of a global hunger crisis, including in countries such as Yemen, Libya, Syria, Egypt and Lebanon, which are vulnerable to market shocks.

Boubaker Ben Belhassen, the FAO's trade and markets director, said fighting in Ukraine had "exacerbated" an "already-difficult situation, putting further upward pressure on prices".

The Covid-19 pandemic, weather shocks, international demand and rising costs of energy, transport and fertilizers were already effecting costs, Mr Belhassen told reporters.

The agency’s price index, which tracks shifts in a basket of commodities, surged by 12.6 per cent last month, making a “giant leap to a new highest level since its inception in 1990", said the Rome-based agency.

The US has accused Russian President Vladimir Putin of creating a global food crisis, though the Kremlin has countered, blaming the mostly western sanctions on Moscow for market turmoil.

Vegetable oils, cereals and meats reached record highs, while sugar and dairy prices also rose significantly.

Russia and Ukraine — both of which are home to large areas of grain-producing land that make up a vital global breadbasket — together accounted for about 30 per cent of wheat and 20 per cent of maize exports in recent years, the FAO said.

Farmers in Ukraine’s war-struck agricultural areas have not planted crops during the spring sowing season, raising doubts about this year’s harvest.

The country’s ports have also been shut by a Russian blockade.

The conflict has also sent oil and gas prices upwards, fuelling inflation and prompting fears of economic recession.

Russia has faced global outrage, sanctions and diplomatic isolation over its invasion of Ukraine, which began on February 24. Moscow says its “special military operation” is needed to stop Nato’s eastward expansion.