An Instagram post has suggested that the war in Ukraine is not the cause of global shortages of certain products.
The post shows Ukraine highlighted on a world map, and says: “Let this sink in for a minute. They want you to believe because of this little red spot (Ukraine) we have worldwide shortages of oil, gas, paper, milk, grain and other raw materials. Hmmm Yeah Right”.
It is true that the war in Ukraine is not solely responsible for issues with the supply of some products currently being seen in the UK and around the world. Many of these issues began before Russia invaded Ukraine on 24 February 2022.
However, the consequences of the war in Ukraine have contributed to supply issues for certain products.
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War has affected Ukrainian and Russian exports
The war has impacted the ability of Ukraine to export goods, with the country’s ports blockaded and many of its farmers set to struggle to harvest or sell crops this year. But it has also impacted Russian exports, largely as a result of the extensive sanctions placed on the country by the international community in response to its invasion.
The war in Ukraine is expected to have a significant impact on the supply of some of the products mentioned in the post. For example, Ukraine and Russia together supply approximately 30% of the world’s wheat and 20% of the world’s maize to global markets (ie for export) and also contribute a significant proportion of the global supply of other grains like barley. Russia, Ukraine and Belarus, which has also been sanctioned for its support of Russia’s invasion, are also major suppliers of fertilisers used by farmers worldwide.
As a result of export bans on Russia and the reduced ability of Ukraine to export these products, the prices of grain and fertiliser have increased significantly.
The United Nations has warned that the war is likely to result in food shortages, especially in lower income countries. A UN World Food Programme report into the impact of the war on its programmes says: “International food and fuel prices have increased sharply since the onset of the conflict. This will ultimately affect local food prices and, because of this, access to food.”
The war is also worsening existing issues with fuel supply. Many countries, especially those in Europe which have historically been heavily reliant on Russian oil and gas imports for fuel, are currently disengaging from their supply. Bans on Russian oil imports have led to increased oil prices, although these prices were already increasing before the war began. Meanwhile, according to Credit Suisse the demand for liquified natural gas is expected to outstrip supply as the world moves away from Russian gas imports.
There have been some warnings that bans of Russian oil and gas as the wider issues with fuel supply could lead to widespread power cuts over the coming winter, however there is some uncertainty about how significant the impact will be, and similar warnings were also issued ahead of the last winter.
However, it is important to note that while the war in Ukraine has contributed to some supply issues, it is not the only factor in the supply issues and price increases currently being experienced in many countries around the world.
Disruption to global supply chains has been evident since summer 2021. This disruption began as a result of a combination of factors, including the Covid-19 pandemic, increased demand, labour shortages and poor harvests, but has been further exacerbated by the war. These issues have impacted a range of different industries including, as the post states, milk production and paper printing.
Warnings of an “energy crisis” have also been circulating since last year, with the International Energy Agency (IEA) in November pointing to a number of factors, including underinvestment in the energy sector and increased global demand post-pandemic. IEA executive director Fatih Birol has since said that following Russia’s invasion of Ukraine the world was facing “the first global energy crisis”.
Image courtesy of John Cameron