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Finance

‘We are not the source of the problem.’ Kremlin says the West is to blame for global food shortage

By
Tristan Bove
Tristan Bove
Contributing Reporter
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By
Tristan Bove
Tristan Bove
Contributing Reporter
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May 24, 2022, 6:30 AM ET

With exports from Ukraine and Russia largely halted, global food prices are projected to rise 22.9% this year, according to the World Bank, and a hunger crisis affecting the world’s most vulnerable countries is well underway.

The United Nations and international organizations have warned that more costly food could upend the global economy, and create widespread hunger in vulnerable countries in Africa and the Middle East. 

In the West, many believe that Russia’s ongoing blockade of Ukrainian ports—which has eliminated nearly 25 million tons of grain from the global supply chain—is primarily responsible for the shortage. In Russia, officials agree there is a food crisis, but not for the same reasons.

“We are not the source of the problem,” said Kremlin press secretary Dmitry Peskov in a call with journalists on Monday, adding the West’s reaction to the invasion of Ukraine and sanctions are primarily to blame. 

“The source of the problem that leads to world hunger are those who imposed sanctions against us, and the sanctions themselves,” Peskov said.

Together, Russia and Ukraine account for around a third of global wheat exports. Russia and neighboring Belarus—which is also under sanctions—are crucial global suppliers of fertilizer products, while Ukraine also exports large amounts of sunflower oil, corn, and barley.

Although sanctions on Russia may be playing a role in higher global food prices, it is far from the only reason.

“The sanctions are making things a bit worse, but it would be illogical to say that they are the primary drivers,” David Laborde, a senior research fellow in food markets and trade at the International Food Policy Research Institute, told Fortune.

No Western sanctions so far have specifically targeted Russian food or fertilizer exports, Laborde said, but they are having an “indirect effect” by impacting the ability of oligarchs involved in the food industry to finance their companies’ activities. Russian companies and banks have also been banned from accessing international payment systems, which has hit agricultural exports.

But while sanctions on Russia have had an effect on global food prices, the country’s food exports have remained mostly consistent throughout the war. The biggest driver of high food prices has been the lack of food leaving Ukraine since the Russian invasion began, which is largely due to the Russian army’s obstructive military tactics to block Ukrainian exports from leaving the country.

“It is certainly clear that Ukraine’s exports are being seriously constrained by warfare and shipping disruptions,” Patrick Westhoff, director of the University of Missouri’s Food and Agricultural Policy Research Institute, told Fortune.

Russia is forecasted to export 39 million tons of wheat next year, leading all other countries, according to the USDA’s latest global agricultural supply and demand report. That’s roughly the same as the 39.1 million tons Russia exported last year. The same report finds that Ukraine’s wheat exports this year will be significantly constrained, down to 10 million tons from nearly 17 million last year.

During the war, Russian forces have blockaded and bombed critical seaports, targeted roads and railways needed to carry grain with heavy artillery attacks, and reportedly even stole Ukrainian grain to try and sell it themselves.

The consequence has been a significantly lower grain output from Ukraine, contributing to higher global prices. Meanwhile, despite sanctions, Russia’s food exports are projected to remain level and even exceed last year’s amounts. 

Sanctions on Russia are having some effect on global food prices and world hunger—in large part due to a global fertilizer shortage—but outside of resuming Ukrainian food exports to restock food inventories worldwide, there is little that can be done to soften the global hunger crisis.

“You can remove the sanctions, you may ease pressure on some markets, you may also ease some uncertainty, but overall prices are not going to go down until supply everywhere has readjusted,” Laborde said.

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