Russian attacks on Ukrainian supply chains are a tactical move to stir up unrest

According to the country’s logistics experts, bottlenecks and armed logistical blockades could precipitate widespread food shortages in countries in Asia and Africa, if food cannot be transported from Ukrainian silos.

Following the Russian invasion on February 24 and the protracted and increasingly bitter conflict that followed, the Black Sea ports, particularly Odessa and Mariupol on the Sea of ​​Azov coast, which handle approximately 90% of Ukrainian grain shipments, were closed.

According to Odessa-based logistics consultancy Informall BG, the biggest importers of Ukrainian wheat last year were Turkey, Egypt, Indonesia, Iran, Pakistan, Saudi Arabia, Bangladesh, Yemen, Lebanon and Nigeria.

However, the invading Russian forces sought to thwart food exports to these and other destinations benefiting from the low-priced grain. The assumption is that Russia seeks to prevent the flow of revenue into the Ukrainian economy, while impeding imports of military equipment for kyiv’s war effort.

Alexander Khromov, Project Manager at Informall, said: “Unblocking Ukrainian seaports is vital, not only for Ukraine, which is obvious, but for other countries. Of course, Ukraine has its own crop reserves and, at the moment, a food crisis is not expected in the country, but life in countries dependent on crops imported from Ukraine may face dramatic changes. .

The United Nations Executive Director for the World Food Programme, David Beasley, also raised concerns about port blockades and the targeting of logistics infrastructure when he said on May 6: “Right now the silos at grains of Ukraine are full. At the same time, 44 million people around the world are heading towards starvation. We need to open these ports so that food can flow in and out of Ukraine. The world demands it because hundreds of millions of people around the world depend on these supplies.

Additionally, Daniil Melnychenko, data analyst at Informall, said The Loadstar Russia could use rising food prices to stir up unrest in countries where supplies are scarce and incomes low.

“The shortage of food could even cause another mass migration from the African continent and/or the Middle East,” he added.

Mr. Melnychenko believes that if we want to avoid a food crisis in these potentially risky regions, it is essential that “wheat exporters [around the world] dip into their wheat reserves to cool the market, which slows global supply. Undoubtedly, it will take time and effort for recipient countries to reorganize their supply chains and place orders from new sources outside the Black Sea region.”

According to Informall, the blockade of ports and attacks on rail and road infrastructure pose a “serious threat to global food security”.

“The Russian army regularly destroys fuel storage facilities and oil refineries, aggravating the problem of fuel for logistics and agribusiness in Ukraine. While Ukrainian trucking companies are struggling to find diesel fuel, farmers are running out of fuel for farm equipment and vehicles,” Melnychenko said.

Ukraine’s economy ministry said exports fell to a tenth of pre-war levels in March-April, resulting in a $1.5 billion monthly shortfall in export earnings.

According to the UN, Ukraine was the world’s sixth largest wheat exporter in 2021, with a 10% share of the world market, shipping 20 million tonnes of wheat and meslin (a mixture of wheat and rye) > The country is also one of the world’s leading exporters of barley, sunflower seeds, corn and vegetable oil.

About 16% of world corn exports, 24 million tons, and about 55% of world sunflower oil trade, 5.1 million tons, were produced by Ukrainian farmers last year.

The inability to export the war-torn country’s crops, depending on the type of grain and the destination, will increase international food prices by up to 25% from levels already sharply high due to the Covid-19 crisis. .

Moreover, this year, at least 30% of Ukraine’s fertile land has not been sown, due to the war, with significantly lower expected harvest volumes, so that even if the ports reopened during the harvest, the volumes of Ukrainian grain available for export would be substantially diminished.

Informall surveyed key agribusiness players who concluded that Ukraine will face a reduced grain harvest this year to around 56 million tonnes, the lowest in the past 10 years, and a drop of 34 % compared to last year’s record figures.

Meanwhile, the fuel situation is deteriorating as logistical problems increase, with fuel now being imported from the EU via complex overland routes. Historically, Russia and Belarus supplied fuel to Ukraine through a common rail system. However, since the invasion, importers have had to seek alternatives in the EU, which does not have the same rail gauge, which has led to significant delays at borders.

This means that the only way to transport goods by rail is through five gauge-changing stations, located along Ukraine’s borders with Poland, Hungary and Slovakia. Currently, Ukrainian Railways (Ukrzaliznytsya) operates about 1700 European-type gauge carriages at gauge interchange stations for Ukrainian railway wagons/platforms heading to EU seaports.

This is quite a limited capacity considering that as of May 4, more than 30,000 rail wagons were queuing at the western borders to the EU. The waiting time varies from 14 to 35 days before a wagon crosses the border.

It is important to note that the average cost of the transport component of rail and/or road transport of grain, before loading onto a ship, adds up to 40% to the price of exported agricultural products, depending on the crop and the route.

Attacks on critical infrastructure in Ukraine are also an obstacle to exports, but the target of these attacks can also be Asian and African countries that depend on these exports.

Moreover, a protracted war could mean that Ukrainian crops for the 2023 harvest will never be planted, prolonging the disruption and introducing another level of potential danger to global markets.

Mr. Vesselovski argued: Although the Russian war against Ukraine has already had a knock-on effect on production, the holding [down] wheat prices for a year and the unblocking of Ukrainian seaports is a crucial step to stabilize world food market prices at least at the current level and prevent chaos in countries that cannot withstand the shocks of war.

Mr. Melnychenko will be the guest this evening BBC radio program business matters, broadcast on World Service and Radio 4.

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