Russia-Ukraine Conflict Agribusiness Coverage and Solutions

What's at stake for food and agriculture commodities?

In recent years, Russia and Ukraine have become emerging agricultural powerhouses. They account for nearly 30% of world wheat exports, 30% of world trade of barley exports, and command a 15% market share of vegetable oils. To say these two countries have become an integral part of global agricultural and food commodities trade is no overstatement.

More than 90% of all Ukrainian food and ag commodity exports pass through southern Ukraine, and any seizing or fighting around these ports will be tremendously disruptive.

On the Russian side, the risk to world trade is not from military incursion but from economic sanctions. In response to military action, Russia is locked out of the SWIFT banking system, the electronic "plumbing" that facilitates nearly all international wire transfers, Russia could still export but would be unable to receive payment. Presumably, exports will grind to a halt in this essential origin if this occurs.

Risks to the world of fertilizers

Russia is a primary producer of all three of the maincom mercial fertilizer nutrients, which are essential for plant growth, - nitrogen (N), phosphate (P2O5) and potassium (K2O). It has globally significant phosphate rock reserves in the Kola peninsula, potash reserves around Perm, and is a major oil and gas producer, with hydrocarbons being the key raw material for nitrogen fertilizers and the by-product sulphur from oil and gas refining a key intermediate for phosphate processing. From this core resource base Russia has developed a large down-stream fertilizer production sector, is self-sufficient for fertilizers and is an important global exporter.

In broad terms, Russia accounts for almost 13% of global trade for key fertilizer intermediates (ammonia, phosphate rock, sulphur) and for almost 16% of global trade in the key finished fertilizers.