Many African countries are dependent on food and fertilizer imports from Russia and Ukraine. But with the war comes shortages and price inflation. In many places, this threatens the food security of the population and links sufficient supply to the purchasing power of individuals. In our new Kiel Policy Brief (IfW), we draft three scenarios of how grain supply could be affected in the long term.
With the United Nations 2030 Agenda, the international community set itself the goal of eliminating hunger globally by 2030. In reality, we are far away from reaching that goal. Food security was already at risk in some African countries before the war broke out. Now, a couple of weeks in, people are faced with existential problems.
After all, Ukraine and Russia head the list of the most important grain exporters globally. Wheat accounts for more than 80 percent of Russian grain exports. In Ukraine, the agricultural sector is more diversified – making Kyiv also one of the most important grain maize suppliers. Then there are products such as sunflower oil and fertilizers. Economies are used to these imports. If they suddenly have to go without, many African countries will struggle to mitigate the negative consequences.
We see strong dependencies in states where poverty and political instability burden the social structures and the basic needs of the population are at risk. Shortages and price inflation will be felt strongly by those who spend most of their income on food. In countries like Kenya and Nigeria, data from 2016 suggests, citizens spent more than 50 percent of their monthly income on food. Egypt is also a very large consumer of wheat per capita, importing about 80 percent from Russia or Ukraine.
Meanwhile, other countries, especially in tropical Africa, prefer other carbohydrate sources and consume less wheat. Still, the percentage of dependency on the warring factions remains high.
The war inevitably reduces production volumes. The heavily mechanized Ukrainian agriculture relies on important production factors such as diesel. But this is now used by the army. Because of the conflict, farmers cannot till their fields, sow less, or use less fertilizer. As a consequence, the harvest will be significantly smaller, as are the export volumes. The scarce supply causes prices to rise on the world market.
At the same time, trading costs are on the rise. The war affects important ports in the Azov and Black Seas and the sea route is hardly accessible due to blockades. The presence of the Russian Navy drove up insurance claims for cargo ships. Russian ports are also being called at less. Many shipping companies fear becoming a target of military attacks or political action.
And then there are political interventions: Ukraine, Russia and some EU countries such as Hungary have stopped grain exports completely or at least to certain countries. These hurdles in trade reduce the exported quantities and again lead to rising grain prices on the world market.
Ultimately, we also have to take indirect effects into account. Agricultural production is dependent on certain operating resources – so-called inputs – such as energy and fertilizers. Oftentimes, both are imported from Russia or Ukraine. The increase in energy prices that we are seeing around the world is making fertilizer production more expensive. Especially one needs gas to produce ammonia. As a result, yield-enhancing measures in the agricultural sector are becoming less profitable worldwide.
This is a particular challenge to small farmers. Usually, they have little financial buffer for fertilizer and seeds and will therefore no longer be able to fertilize as usual. Their harvests will be less productive. The result, again: the quantities of grain produced continue to fall, prices increase.
Food security was already fragile in many African countries before the war broke out. Global food prices have been rising for several years as the demand grew faster than the supply. Additionally, the COVID-19 pandemic has caused a global supply shock and disrupted global supply chains over the last two years – resulting in rising food prices globally.
And then there is climate change and its associated phenomena such as droughts or plagues of locusts, which are causing further difficulties for people in East Africa. In early April, the International Red Cross warned of famine in West Africa. In both cases, serious crises are expected for the second half of 2022.
In order to understand the long-term consequences, we at the Kiel Institute for the World Economy simulated Africa's grain supply using the KITE (Kiel Institute Trade Policy Evaluation) trade model. We considered wheat as well as other cereals such as maize, millet, barley, and rice.
One of the scenarios we modeled assumes that Ukraine will be severely limited in future grain cultivation opportunities due to the destruction and the war economy. We assumed a 50 percent drop in productivity. Scenario 2 calculates the effect of increased transport costs on trade with both Ukraine (+50 percent) and Russia (+25 percent). And finally, a hypothetical scenario 3 quantifies how the situation will get worse if Russia completely stops grain exports.
It is important to bear in mind that this is a long-term model. The estimated effects in the scenarios depict the situation after other producers have increased their cultivation volumes due to increased price levels or have altered their way of cultivation.
Short-term effects were not calculated. It should be expected that these will be significantly stronger because the adjustment of planted quantities and products will take at least a few quarters. Many reports from affected African countries about sharply rising prices already support this assessment.
So what are the basic effects? In all cases, we see higher prices in many African countries, especially for wheat. This particularly affects Egypt and Tunisia. There, dependency on grain imports and per capita consumption are highest. Wheat is deeply rooted in the local cuisine. It is therefore not to be expected that the population will switch to other foods. So situations like the Arab Spring of 2011 are definitely conceivable. Back then, rising food prices triggered some of the protests.
In significantly poorer countries - for example, Rwanda, Tanzania, Mozambique, Kenya, or Cameroon - the calculated effect sizes are smaller. But that does not mean that the damage to people’s livelihoods is less. On the contrary: In many places, the supply is already strained or no longer secured. Compared to North African countries, households have less financial leeway. They cannot keep up with rising prices and can afford fewer groceries.
Wheat imports would fall by 13.3% and 12.3% respectively in Egypt and Tunisia over the long term. Other badly affected countries are Ethiopia, Togo, and Mozambique. We expect imports to fall sharply, between almost 11% and almost 8%. With other grains such as corn, which is used both as food and as feed for livestock, we see other countries such as Cameroon, South Africa, Guinea, and Senegal at risk.
If there is also a Russian export ban, our calculations show that countries in North Africa and sub-Saharan Africa will face immense problems. In this case, Rwanda's wheat imports decrease by almost half (-48.4%). The price there would level off at a much higher level, more than a third (+39.6%) to be precise. Also in Kenya (imports -26.4%; prices: +32.4%), in Tanzania (imports -36.9%; prices: +13.1%), and in Mozambique (imports -21.4%; prices: +15.1%) the consequences would be devastating. Wheat will develop into a scarcely affordable commodity there. This has dramatic consequences for food security. The effects are much stronger in this scenario because Russian agriculture specializes in wheat — far more than Ukraine.
Globally, even after the invasion of Ukraine, there is no shortage of food. Rather, it becomes a matter of one’s purchasing power whether someone can afford enough food or not. In rich countries we waste a lot of food and consume meat that is inefficient both from a caloric and ecological point of view. At the same time, the rise in prices on the international agricultural markets is threatening poorer households in developing countries.
As a consequence, we should now prioritize supporting vulnerable households in Africa. This is especially a task for the humanitarian sector. In addition, countries should try to diversify their supply. This is one of the most important lessons of the Ukraine war: The heavy dependence of entire countries on individual suppliers poses an immense risk to food security.
Geopolitically, the world is becoming more unstable. Diversification is an investment in long-term food security. This also includes – with a view to increasing climate change – making local food production more resilient. In addition, it should be considered whether internationally held strategic food reserves offer an option to mitigate the negative short-term effects of such crises. These reserves are not managed by individual states but by international organizations. However, they would have to be protected against veto interventions by individual powers so that parties to the conflict cannot control these reserves.
Prof. Dr. Tobias Heidland is a project director at Megatrends Africa and works in the Kiel Institute Africa Initiative. He heads the "International Development" research center at the Kiel Institute for the World Economy (IfW).
Sebastian Jävervall , Ph.D., works as a postdoc in the research center "International Development" at the Kiel Institute for the World Economy (IfW) and works in the Kiel Institute Africa Initiative.
Hendrik Mahlkow is a phd student at the Kiel Institute for the World Economy (IfW) and works in the Kiel Institute Africa Initiative.