Rome, 2022
Information Note
The importance of Ukraine and the Russian Federation for global agricultural
markets and the risks associated with the current conflict
Executive Summary
1. Market structure, trade profiles and recent price trends
1.1 Market shares
o The Russian Federation and Ukraine are among the most important producers of agricultural commodities in
the world. Both countries are net exporters of agricultural products, and they both play leading supply roles
in global markets of foodstuffs and fertilisers, where exportable supplies are often concentrated in a handful
of countries. This concentration could expose these markets to increased vulnerability to shocks and volatility.
o In 2021, either the Russia Federation or Ukraine (or both) ranked amongst the top three global exporters of
wheat, maize, rapeseed, sunflower seeds and sunflower oil, while the Russian Federation also stood as the
world’s top exporter of nitrogen fertilizers and the second leading supplier of both potassic and phosphorous
fertilizers.
1.2 Trade profiles
o Many countries that are highly dependent on imported foodstuffs and fertilizers, including several that fall
into the Least Developed Country (LDC) and Low-Income Food-Deficit Country (LIFDC) groups, rely on
Ukrainian and Russian food supplies to meet their consumption needs. Many of these countries, already prior
to the conflict, had been grappling with the negative effects of high international food and fertilizer prices.
2 Risk analysis: Assessing the risks emanating from the conflict
2.1 Trade risk
o In Ukraine, the recent escalation of conflict has already led to port closures, the suspension of oilseeds
crushing operations and the introduction of export licensing requirements for some crops, all of which could
take a toll on the country’s exports of grains and vegetable oils in the months ahead. It also uncertain whether
Ukraine will be able to harvest its crops during protracted conflict. Much uncertainty also surrounds Russian
export prospects going forward, given sales difficulties that may arise as a result of economic sanctions
imposed on the country.2
2.2 Price risk
o FAO’s simulations gauging the potential impacts of a sudden and steep reduction in grain and sunflower seed
exports by the two countries indicate that these shortfalls could only be partially compensated by alternative
origins during the 2022/23 marketing season. The capacity of many of these origins to boost output and
shipments may be limited by high production input costs. Worryingly, the resulting global supply gap could
push up international food and feed prices by 8 to 22 percent above their already elevated levels.
o If the conflict keeps crude oil prices at high levels and prolongs the two countries’ reduced global export
participation beyond the 2022/23 season, a considerable supply gap would remain in global grain and
sunflower seed markets, even as alternative producing countries expand their output in response to the
higher prices. This would keep international prices elevated well above baseline levels.
2.3 Logistical risks
o In Ukraine, there are also concerns that the conflict may result in damages to inland transport infrastructure
and seaports, as well as storage and processing infrastructure. This is all the more so given the limited capacity
of alternatives, such as rail transport for seaports or smaller processing facilities for modern oilseeds crushing
facilities, to compensate for their lack of operation.
o More generally, apprehensions also exist regarding increasing insurance premia for vessels destined to berth
in the Black Sea region, as these could exacerbate the already elevated costs of maritime transportation,
compounding further on the final costs of internationally sourced food paid by importers.
2.4 Production risks
o Although early production prospects for 2022/23 winter crops are favourable in both Ukraine and the Russian
Federation, in Ukraine, the conflict may prevent farmers from attending to their fields, harvesting and
marketing of their crops, while disruptions to essential public services could also negatively affect agricultural
activities.
o FAO’s preliminary assessment suggests that, as a result of the conflict, between 20 and 30 percent of the areas
under winter cereals, maize and sunflower seed in Ukraine will either not be planted or remain unharvested
during the 2022/23 season, with the yields of these crops also likely to be adversely affected.
o In the case of the Russian Federation, although no major disruption to crops already in the ground appears
imminent, uncertainties exist over the impact that the international sanctions imposed on the country will
have on food exports. Over the medium term, the loss of export markets that they may entail could depress
farmer incomes, thereby negatively affecting future production decisions.
2.5 Humanitarian risks
o The conflict is set to increase humanitarian needs in Ukraine, while deepening those of millions of people that
prior to its escalation were already displaced or requiring assistance due to the more than eight-year conflict
in the eastern part of the country. By directly constraining agricultural production, limiting economic activity,
and raising prices, the conflict will further undercut the purchasing power of local populations, with
consequent increases in food insecurity and malnutrition.
o Humanitarian needs in neighbouring countries, where displaced populations are seeking refuge, are also set
to increase.
o Globally, if the conflict results in a sudden and prolonged reduction in food exports by Ukraine and the Russian
Federation, it could exert additional upward pressure on international food commodity prices to the 3
detriment of economically vulnerable countries, in particular. FAO’s simulations suggest that under such a
scenario, the global number of undernourished people could increase by 8 to 13 million people in 2022/23,
with the most pronounced increases taking place in Asia-Pacific, followed by sub-Saharan Africa, and the Near
East and North Africa.
2.6 Energy risks
o The Russian Federation is also a key player in the global energy market. As a highly energy-intensive industry,
especially in developed regions, agriculture will inevitably be affected by the sharp increase in energy prices
that has accompanied the conflict.
o Agriculture absorbs high amounts of energy directly, through fuel, gas and electricity use, and indirectly, by
using agri-chemicals such as fertilisers, pesticides and lubricants.
o With prices of fertilizers and other energy-intensive products rising as a consequence of the conflict, overall
input prices are expected to experience a considerable boost. The higher prices of these inputs will first
translate into higher production costs and eventually into higher food prices. They could also lead to lower
input use levels, depressing yields and outputs in the 2022/23 crop season, and giving further upside risk to
the state of global food security in the coming years.
o Higher energy prices also make agricultural feedstocks (especially maize, sugar and oilseeds/vegetable oils)
competitive for the production of bio-energy and, given the large size of the energy market relative to the
food market, this could pull food prices up to its energy parity equivalent.
2.7 Exchange rate, debt, and growth risks
o The Ukrainian Hryvnia reached a record low against the US dollar in early March 2022, with likely
repercussions for Ukrainian agriculture, boosting its export competitiveness and weighing on its ability to
import. Although their extent remains unclear at this stage, conflict-induced damages to the country’s
productive capacities and infrastructure are expected to entail very high recovery and reconstruction costs.
o The economic sanctions imposed on the Russian Federation have also led to a significant depreciation of the
Russian Rouble. Although this should make Russian exports of agricultural commodities more affordable, a
lasting Rouble depreciation would negatively affect investment and productivity growth prospects in the
country.
o Weakening economic activity and a depreciated Rouble are also expected to have serious effects on countries
in Central Asia through the reduction of remittance flows, as for many of these countries remittances
constitute a significant part of gross domestic product (GDP).
o Agriculture is the economic backbone of many developing countries, the majority of which rely on the US
dollar for their borrowing needs. As such, a lasting appreciation of the USD vis-à-vis other currencies may have
negative significant economic consequences for these countries, including for their agrifood sectors.
Moreover, the potential reduction of GDP growth in several parts of the world will affect the global demand
for agrifood products with negative consequences for global food security, while also likely reducing the
availability of funds for development, in particular if military expenses increase globally.
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3. Policy recommendations
o In order to prevent or limit the conflict’s detrimental impacts on the food and agricultural sectors of Ukraine
and the Russian Federation, every effort should be made to keep international trade in food and fertilizers
open to meet domestic and global demand. Supply chains should be kept fully operational, including the
protection of standing crops, livestock, food processing infrastructure, and all logistical systems.
o In order to absorb conflict-induced shocks and remain resilient, countries that depend on food imports from
Ukraine and the Russian Federation should diversify the sources of their food supplies by relying on other
exporting countries, on existing food stocks or by enhancing the diversity of their domestic production bases.
o The food security impacts of the conflict on vulnerable groups necessitates timely monitoring and well-
targeted social protection interventions to alleviate the hardship caused by the conflict and to foster a
recovery from it. To assist the internally displaced, refugees, and groups directly affected by the conflict, the
reach of Ukraine’s national social protection system should be expanded by registering additional population
groups within the Unified Social Information System.
o In countries hosting refugees, access to existing social protection systems and job opportunities should also
be eased by lifting legal access barriers and, where needed, by increasing the capacity of host countries’ social
protection systems to absorb additional caseloads.
o Countries affected by potential disruptions ensuing from the conflict must carefully weigh measures they put
in place against their potentially detrimental effect on international markets including over the longer term.
Particularly, export restrictions must be avoided; they exacerbate price volatility, limit the buffer capacity of
the global market, and have negative impacts over the medium term.
o Market transparency and policy dialogue should be strengthened as they play key roles when agricultural
commodity markets are under uncertainty and disruptions need to be minimised to ensure that international
markets continue to function properly and trade in food and agricultural products to flow smoothly.
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Information Note
The importance of Ukraine and the Russian Federation for global agricultural
markets and the risks associated with the current conflict
2. Market structure and trade profiles1
The Russian Federation and Ukraine are among the most important producers of agricultural commodities in the
world. In the cereal sector, their contribution to global production is especially significant for barley, wheat and
maize. Combined, the two countries, on average and respectively, accounted for 19, 14 and 4 percent of global
output of these crops between 2016/17 and 2020/21. In the oilseed complex, their contribution to global
production was particularly important for sunflower oil, with just over half of world output originating, on average,
in the two countries during this period. Their average shares in global rapeseed and soybean production are
comparatively more limited, standing at 6 and 2 percent, respectively.
Figure 1: Share in global production of selected crops
(2016/17-2020/21 Avg.)
Russian Federation Ukraine Others
Sunflowerseed
Barley
Wheat
Maize
Rapeseed
Soybean
0% 25% 50% 75%100%
Source: FAO XCBS system
1.1 Market shares
The critical role that the Russian Federation and Ukraine play in global agriculture is all the more evident from an
international trade perspective (see figures 2 to 5 and tables 1 and 2). Both countries are net exporters of
agricultural products, and they both play leading roles in supplying global markets in foodstuffs, for which
exportable supplies are often concentrated in a handful of countries, exposing these markets to increased risks of
vulnerability to shocks and volatility. For instance, in the wheat and meslin sector, where the top seven exporters
combined accounted for 79 percent of international trade in 2021, the Russian Federation stands out as the top
1 Information update as of 8 March 2022.