Should major multinational agriculture companies pull out of Russia, following in the footsteps of their peers in other industries?
The short answer is: It’s complicated.
Brazil, which exports soybeans to coffee and sugar and is the world’s biggest importer of fertilizer, is for keeping crop nutrients sanction free for the sake of food security. The U.S. on the other hand is for tightening the grip on Russia, which invaded Ukraine a month ago.
But even the U.S. is affected by a disruption in supply of fertilizer and other agricultural inputs from Russia and Belarus. It imports almost all of its potash from Canada, while about a third of nitrogen used in the U.S. comes from the Middle East and Russia. For phosphate fertilizers, Saudi Arabia and Australia account for most of the shipments, according to Bloomberg News.
Humanitarian concerns are being cited by companies like Cargill, Bayer and Archer Daniels Midland for staying put in Russia, arguing that their pullout will affect food availability for Russian citizens and other countries. Other industries like drugs and consumer products have also cited the same humanitarian considerations for continuing to operate in Russia. They include Johnson & Johnson and AmerisourceBerger Corp., reported the Wall Street Journal.
Any decision to stay or leave has important ramifications for food supply and by extension, world hunger. Russia and Ukraine are two of the world’s major grain-producing countries. A decline in Russian exports of wheat and disruption in planting and harvests in Ukraine could result in serious food shortages around the world.
“[As] hunger threatens Ukraine directly, the fallout from this war will spread across the globe. Russia and Ukraine together export about 30 percent of the world’s wheat,” said World Food Programme (WFP) Executive Director David Beasley.
A report just published by WFP warns that the costs of its global operations look set to increase by US$29 million a month. When added to pre-existing increases of US$42 million (since 2019), the total additional costs facing WFP are US$71 million per month.
This could spell disaster for millions, as WFP had already warned that 2022 would be a year of catastrophic hunger, with 44 million people in 38 countries teetering on the edge of famine.
As well as exporting a significant proportion of the world’s wheat, over the past ten years Ukraine has become WFP’s biggest supplier of foods such as sunflower oil.
Afghanistan, Ethiopia and Syria are particularly vulnerable to any hold-up on wheat imports, on which millions of people are heavily dependent. These countries, where WFP is running emergency operations, are already reeling from the combined effect of conflict, climate change, the coronavirus pandemic and rising costs.