Wednesday, 9 July 2014

Russia/Ukraine conflict could impact negatively on food supplies

THE ongoing conflict between Russia and Ukraine could have a negative impact on Grenada and other CARICOM territories’ food supplies, especially the availability of wheat which is linked to food supply for both humans and animals.

According to a report produced by the Inter-American Institute for Co-operation on Agriculture (IICA), pressure on staple grain supplies would push up prices in the international market.

The Director General of the IICA, Dr. VĂ­ctor M. Villalobos, issued the warning to the Ministers of Agriculture of IICA’s 34 member countries on June 30.

Any reduction in the wheat and corn exports of Russia and Ukraine, two of the world’s biggest cereal producers and exporters, would affect the availability of grains in global markets and trigger rises in
international prices.

However, IICA added, the increase in international prices has so far been small and short-term. During the conflict, ports in the Ukraine and Crimea – through which the vast majority of grain is exported to world markets – have continued operating normally.

The effects on the countries of the Americas of a reduction in grain supplies in the world market, or an increase in prices, would vary depending on a number of factors, including the duration of the conflict, the size of existing inventories and the productive and commercial structure of each country. Wheat contributions to Grenada’s National Diet is 15.31 per cent while its 1.63 per cent for corn, according to the IICA report.

According to Villalobos, countries that import large quantities of grains would be under more financial and supply pressure to meet the domestic demand, while wheat and corn exporters could benefit from higher international prices.

IICA recommended that its member countries closely monitor market signals and review their import and export strategies for wheat and corn.

Importing nations would have to ensure that any fluctuations do not affect their food security, while exporters could take advantage of the opportunity to obtain better prices for their harvests in international markets.

Between January and April 2014, wheat prices rose by 18 per cent and corn prices by 12 per cent. In the case of wheat, it was the largest increase since mid-2012. The two countries contribute nearly 13 per cent and 14 per cent of world corn and wheat exports, respectively. Hence, any situation that affects their production or marketing capacity is bound to have an impact on international agricultural markets. (LS)

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