According to the World Bank, a number of developing economies are facing wheat supply for the near term as a result of their reliance on Ukrainian wheat exports, which have been hampered by Russia’s invasion of the country.
Gambia, Lebanon, Moldova, Djibouti, Libya, Tunisia, and Pakistan, according to the World Bank’s latest Trade Watch report, are the most vulnerable to disruptions in wheat exports from Ukraine, which account for around 40% or more of their wheat imports.
“These importers will have trouble quickly switching to alternative sources, possibly leading to supply shortages in the short run,” the World Bank said.
Russia’s export restrictions on wheat and other cereal grains to countries other than fellow Eurasian Economic Union members Armenia, Belarus, Kazakhstan, and Kyrgyzstan have aggravated the food supply issue.
According to World Bank data, Russia was the leading wheat exporter in 2018 and Ukraine was the fifth largest. Together, the two countries account for over a quarter of global exports.
Although sanctions imposed by the West in response to Russia’s invasion of Ukraine do not particularly target Russian grain exports, they do make trade finance more difficult by prohibiting dollar and euro transactions with prominent Russian banks.
Apart from direct supply difficulties to Ukraine’s largest grain consumers, rising market prices for wheat will have an impact on middle-income countries around the world, according to the World Bank report.
The Cereal Price Index of the United Nations Food and Agricultural Organization was up 14.8 per cent from a year ago in February, according to the World Bank, and wheat futures prices have risen 60 per cent since the conflict began.
“Moreover, disruptions to exports of wheat will affect markets for corn and rice, which are wheat substitutes, benefiting net exporters and harming net importers of those products,” the bank added.
The World Bank claimed that disruptions caused by the Ukraine conflict could stymie a strong global trade recovery in 2021, with goods and services trade now reaching pre-pandemic levels.
Overall trade increased by 26% over 2020 levels and 17% over 2019, according to the World Bank, with trade values exceeding 2019 levels in all regions except transportation equipment.
(Adapted from TheGlobeAndMail.com)