The horrific war in Ukraine has captured not only headlines for the past month, but our hearts and souls as well. Today’s blog wants to share our grief over the devastation and loss of lives in Ukraine, but also address the impact the war has had on global supply chains.
“The war,” reports The Wall Street Journal (April 8, 2022), “has already disrupted Ukraine’s prodigious exports of wheat, sunflower oil and other produce, boosting global food costs.” It has also halted production at Europe’s largest poultry farm in a southern part of Ukraine that has experienced some of the heaviest fighting.
That facility, which exports about one billion eggs a year, is just one of several to have been hit in the region. The one farm has lost almost four million chickens to thirst and starvation since the war began. On March 1, Russian mortars took out the local power station, cutting all electricity and crashing the automated system that feeds and waters the farm’s chickens. The farm has 11 generators that need three tons of diesel a day, but fuel is no longer being delivered to the farm. With power rationed, the chickens began to die of thirst and starvation.
The chicken factory’s difficulties are emblematic of the broader impact Russia’s invasion is having on Ukraine’s agriculture sector. The industry not only plays a crucial role in feeding the world but also represents the biggest contributor of the country’s economy, raising the specter of a slow recovery if and when peace returns. Known as the breadbasket of Europe, Ukraine is also responsible for 10% of global wheat exports, 14% of corn exports and about half of the world’s sunflower oil.
Now, Ukraine’s agricultural industry is in turmoil. The war has closed ports, deprived farmers of fertilizer and fuel, destroyed equipment and displaced workers. That has resulted in soaring grain prices, piling pressure on developing economies already struggling with food-cost inflation. Global food prices hit a new record high in March, the U.N. said this week. Higher grain prices in particular also threaten a knock-on impact on beef and other meat as producers rely heavily on grain to feed livestock and poultry. The higher costs mean some of the largest food companies in the U.S. will likely continue to raise prices on consumers for products from cereal to deli meat.
Classroom discussion questions:
- Will this war impact U.S. supply chains?
- What will be the long-term effect of the invasion on global markets?