War Risks Raising Food Prices in Asia, Ukraine Envoy Warns

(Bloomberg) -- Russia's invasion of Ukraine could lead to prolonged supply chain disruptions in Asia that could cause a spike in food prices if countries don't act to support the government in Kyiv, Ukraine's Ambassador to Singapore Kateryna Zelenko said.

The two countries account for more than a quarter of the global wheat trade and about 80% of sunflower oil cargoes. The war is threatening to further disrupt supplies to big buyers such as China and India at a time when food inflation is already high.

“The implications of this full-fledged war in the very heart of Europe will be felt on every corner of the globe,” Zelenko said. “Ukraine is considered to be one of the major exporters of essential food products globally, also to Asia. We of course can see the rising prices of oil and gas, which will be also felt in the Asian region.”

Shipments have already come to a standstill. Russia and Ukraine are also responsible for about a fifth of the world's corn and barley shipments and the grain disruptions are threatening to drive up global food prices when costs are already at a decade high.

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Zelenko said that Ukraine's resources are now mobilized around strengthening its defense capabilities as Russian forces move in on its biggest cities. “We speak about the potential threat in case the country will not be able to export food,” she said. “The dimensions and the level of devastation is very high, so if the fields are dead, destroyed and damaged it will definitely have implications.”

Ukraine counts China and India as major trading partners with exports to the former reaching $1.71 billion in 2020, according to the State Statistics Service of Ukraine. However, both countries have abstained from a United Nations Security Council resolution condemning Russia's invasion of Ukraine.

While India said both sides should refrain from violence and return to talks, China has become a little more critical with Foreign Minister Wang Yi saying it “deplores the outbreak of conflict.” China's top government officials have now issued orders to secure commodity supplies due to concerns of further disruptions stemming from the Ukraine-Russia war.

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Japan and Singapore by contrast announced planned sanctions against Russia, including on banks, and export controls. As a trade-dependent nation, Singapore is especially vulnerable to inflated food costs.

As Ukraine's envoy to Singapore, Zelenko said she's approached companies in the city-state that have operations in her country to solicit their support. Companies that fit that profile include Wilmar International, Olam International Ltd. and Food Empire.

“We are really trying now to mobilize the resources of the many companies operating in Ukraine and beyond to support the people on the ground,” she said. “There is still a long way to go.”