Published on May 3, 2022

The War in Ukraine and The Looming Global Food Crisis

In the current market environment surrounded by a multitude of macro tribulations, a sense of security and well-being is critical. Though thousands of miles away from the war unfolding in Eastern Europe, many have already begun to feel the effects of this conflict reverberating throughout our daily lives. Whether it is expensive gas at the pump or the risk-off environment unraveling equity markets. As the crisis continues to unfold, one might ponder the consequences yet to be felt, given the record sanctions levied on Russia and the necessary all-hands efforts of Ukrainians to defend their homeland.

Yet many Americans, as well as others around the globe, may, unfortunately, feel the effects at the grocery store. But it doesn’t just happen there. The farmers who stock our shelves have also felt the sting of rising costs and sanctions overseas, and now concerns are being raised about the possibility of shortages that may lead to a global food crisis.

Fertilizer Frenzy

The crisis in Ukraine has already begun to affect farmers around the globe. It may seem strange to think that a conflict between two neighboring eastern European countries would affect the work of a wheat farmer in Montana or an Avocado grower in Mexico. Still, these are the types of unforeseen and incidental consequences of war, and the disruption to key upstream inputs in the agricultural process has the potential to hinder global food supply lines and trigger the worst global food crisis since World War II. As reported by CNBC, Russia and Ukraine are among the most important producers of agricultural commodities in the world, specifically as major exporters of foodstuff and fertilizer supplies, which are highly concentrated in a small number of regions. Farmers will have increased difficulty in their ability to grow and supply the food needed around the world and in our local supermarkets due to the dramatically increased costs of the fertilizers and other inputs necessary to produce.

Russia was reportedly the world’s top exporter of nitrogen fertilizers and the second-largest supplier of potassic and phosphorous fertilizers in 2021, accounting for roughly 14% of global fertilizer exports. Combined, Russia and Ukraine account for 28% of the globe’s fertilizers made from nitrogen, phosphorous, and potassium. With this large percentage of the world’s fertilizer supply substantially reduced from the market via the effect of sanctions in Russia’s case, or the inability to produce and ship due to the siege of their homeland as in Ukraine’s case, naturally, prices rose during that time.

But the problem goes deeper than this, as these export problems are not just limited to the finished fertilizer products. One might think that if the fertilizers are unavailable from Ukraine and Russia, a country could simply tap supply chain lines from other countries to meet the demand. However, it has become increasingly difficult for these suppliers to acquire the underlying inputs necessary for producing fertilizer – materials such as ammonia, potash, nitrates, nitrogen, and natural gas. Russia supplied around 48% of the world’s ammonium nitrate in 2021, and Russia and Belarus, currently under sanctions as well, had provided about 40% of the world’s potash, among other fertilizer inputs, which has led to dramatic price increases.

U.S. Tampa Ammonia Prices Surge To Record

The Looming Food Crisis: Ammonia Prices Surging

Source: Bloomberg

Fertilizer prices have been under pressure for a while, and the numbers are staggering. According to Chris Lawson, Head of Fertilizers at British commodity consultancy CRU, nitrogen fertilizer prices have increased fourfold, and phosphate and potash prices have increased over threefold since the beginning of 2020. Prior to the reduced supply stemming from the crisis in Ukraine and the resulting sanctions on Russia and Belarus, fertilizer prices had already faced inflationary pressures from issues such as global supply chain disruptions, a Chinese export ban, and a Canadian rail strike. Since the beginning of 2022 alone, prices for raw materials constituting the fertilizer market are up about 30%, disrupting producers’ ability to grow crops necessary to avoid a potential food crisis.

Double or Triple Whammy

Bart Melek, Global Head of Commodity Strategy at TD Securities, noted, “all of this is a double whammy, if not a triple whammy. We have geopolitical risk, higher input costs, and basically shortages.” Not only are we seeing issues with fertilizers and the inputs to them, but we are also seeing shortages in foodstuffs like grains that has resulted in the UN’s Food and Agriculture Organization warning of food insecurity in countries around the world, particularly in developing nations. With the current crisis raging, there are now millions of tons of trapped food products in Ukraine and Russia.

Countries that import the most wheat from Ukraine are more vulnerable to price shocks

The Looming Food Crisis: Countries Importing Wheat From Ukraine

Source: Politifact

There are 15 million tons of corn currently trapped in silos across Ukraine, marked for export but unable to leave the country and get to their intended destinations. Ukraine is one of the world’s largest exporters of corn, wheat, and sunflower oil, but grain exports are currently limited to 500,000 tons per month, merely a tenth of normal export amounts before the war began, due to a Russian blockade on major Ukraine ports. These exports would normally provide food staples for billions of people, but disruptions are causing countries to scramble for alternative suppliers as they face a looming food crisis amidst these shortages. Unfortunately, even as some other alternative suppliers attempt to bridge the gap that has been exacerbated by the war, the losses are unlikely to be fully offset.

Export Tumult: Other shippers won’t fully offset the loss of Ukraine’s stalled sales

The Looming Food Crisis: Other Countries Won’t Offset Loss In Ukraine’s Stalled Sales

Source: Bloomberg

Many of us have noticed rising costs in our everyday lives, as food and gas prices climb, with the looming backdrop of record inflation that could make matters even worse. The United Nations has also warned that food prices could rise another 22%, given the current situation. In developed countries, this means that the costs of feeding our families have grown and will likely continue to grow. However, in many emerging economies, the consequences may be far worse, as indicated in the severe drop in Black Sea exports that could leave more than 13 million people undernourished. This looming food crisis may cause a significant rise in global hunger in many parts of the world that are still reeling from the effects of the COVID-19 pandemic.


As the world continues to brace for the unexpected costs of Russia’s aggression toward Ukraine, the shortage in food supplies and fertilizer is yet another consequence of the war that consumers, industry, policymakers, and investors must keep an eye on. With so much volatility across different asset classes, it can be a lot for anyone to follow. With their experience navigating these macroeconomic crises through multiple market cycles, many alternative asset managers are looking to stay ahead of yet another looming crisis.

Forbes, March 2022. “Fertilizer prices just hit a record high sparking fears of global starvation and the worst food insecurity level since World War II.”
CNBC, March 2022. “Fertilizer prices are at record highs. Here’s what that means for the global economy.”
Bloomberg, March 2022. “Fertilizer Prices Surge 43% to Fresh Record as Supplies Tighten.”
Bloomberg, April 2022. “The $120 Billion Global Grain Trade Is Being Redrawn by Russia’s War in Ukraine.”
CNBC, April 2022. “A fertilizer shortage, worsened by war in Ukraine, is driving up global food prices and scarcity.”

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