The war in Ukraine is affecting food security

Since February 24, Russia has been waging war against Ukraine. The effects are being felt in global food supply chains. Companies are avoiding rail transport between Europe and China, which is exacerbated by China's lockdown of Chinese and international rail and air traffic. Transportation routes and supply chains remain troubled and expensive, merchant shipping in the Black Sea is down, and ocean freight rates have skyrocketed, among other consequences, forcing the industry to turn to alternative sources of supply.

Ukraine is the “breadbasket" of Europe. Ukraine's arable land accounts for about a quarter of the total arable land in the European Union. About 80 percent of the world's sunflower oil exports come from Russia and Ukraine, according to the industry association Ovid®. By this fall, another product may be in short supply: Mustard. Nuts, herbs, frozen fruits and fruit juice concentrates could also become scarce. What that means in concrete terms is difficult to estimate at this point, says Dr Pfeifer. Price increases and shortages will keep us on our toes in 2022.

Consider the example of honey. Before the conflict, Ukraine was the largest honey producer in Europe (with more than 50% of production destined for export). Tentamus experts predict a price increase of about 20-30%, along with a reduction in supply. Risks concern authenticity and contaminants, in particular conflict contaminants such as heavy metals and biological contaminants.

Shortage of raw materials using the example of sunflower oil:

According to Tentamus forecasts, Sunflower oil will remain a scarce raw material for a longer period of time, and rapeseed oil from Europe or Canada is also an uncertain alternative due to the previous year's poor harvest. Sunflower oil, margarine, mayonnaise, chips, French fries, pesto, antipasti, roasted nuts, processed cheese and ready-to-use sauces are just some products affected.

Due to the Ukraine crisis, production volumes and commodity flows are changing. This means that some foodstuff and raw materials will be more difficult to get hold of in the short term. And because there's a high probability that the adulteration rate will increase, it's especially important for retailers and importers to work with new suppliers with whom they haven't done business before

With sunflower oil, changing supply chains carry the risk of adulteration with lower grades (refined oil, rancid oil), adulteration with foreign oils or inferior qualities of foreign oils (think Taiwan's Gutter Oil Scandal 2014), and mycotoxins are all serious concerns that can come into play depending on the origin of the sunflower oil.

The experts at Tentamus remind us that this crisis doesn't only affect the large markets. Small ingredients and other smaller yet important markets can also be affected, for example, the coriander market for Germany (since more than half of its exports come from Russia and Ukraine). What should also be considered is that, even if we think that countries such as France or Germany have a huge global influence, they may not play a huge role in the world market, for example, sunflower oil. 

It's expected that adulteration will increase, mainly in the form of foreign materials, inferior quality or substitution. This will also increase the risk of contamination with allergens, mycotoxins, pesticides and other contaminants that directly affect food security.