The food crisis that occurred last year could be re-ignited. Russia has decided to withdraw from the UN-brokered deal that allowed Ukraine to export since August about 33 million metric tonnes of grains across the Black Sea and launched major attacks on Ukraine’s infrastructure. If that decision holds, high food prices are in the offing–and the Global South could undergo a major hunger crisis. The urgency of reconstructing Ukraine’s agricultural sector is even more of a priority than before.
Just last month, the International Ukraine Recovery Conference was hosted in London to focus on mobilizing international support for Ukraine’s economic stabilization and recovery from the effects of the Russian invasion. The private sector’s participation in the reconstruction process is a must, particularly in the vital agricultural sector that was responsible in 2021 for almost 11% of Ukraine’s gross domestic product, 41% of its exports, and 14% of its jobs.
The sheer impact of the war on Ukraine’s agriculture is mind-blowing and has been multiplied by Russia’s ruthless tactics. In fact, in a scorched-earth tactic of a new kind, Russia has riddled Ukraine's fields with mines and destroyed equipment in areas they once occupied. That’s not all. Pure theft has also taken place on a large scale. For instance, the Wall Street Journal reported that Agrocomplex, the family company of the former Russian agriculture minister Alexander Tkachev, has seized the rights to some 400,000 acres, becoming one of the largest farm operators in Ukraine.
Farmland covers about 70% of Ukraine’s territory and Kyiv assesses that about one-third of the fields remain unfit for harvesting because of all the mines planted by Russia. Russian forces currently occupy 22% of Ukraine's farmland. Ironically, since China owns 10% of Ukraine's farmland, it's likely that Moscow is occupying Chinese property.
Talking about the economic damages inflicted on Ukraine’s agricultural sector, the Kyiv School of Economics Agrocenter estimates that direct losses amount to about $8.7 billion, or 23% of the total value of Ukraine’s farming assets, with indirect losses totaling a whopping $31.5 billion. About 2.8m tonnes of grain and 1.2m tonnes of oilseeds have been destroyed or stolen by occupying Russian forces and Ukraine’s expected crop output for this year is back to 2012 levels.
Even if the war stopped today, Ukraine would need 10 years to rebuild its agricultural industry. Mykola Solskyi, Ukraine’s minister of agrarian policy and food, stated that for the agricultural sector to fully recover, it will need the equivalent of a farming Marshall Plan. In this context, it is quite notable that already some of the world’s largest agriculture companies, including Bayer and Corteva, are donating or lending hundreds of millions of dollars to Ukrainian farmers. Another agri-tech company, Syngenta, has also changed its business model in Ukraine since it now purchases grain from farmers and transports it to ports. This allows Ukrainian farmers easy access to funds to help buy their needed supplies.
On the global level, Russia’s invasion has wiped out shipments of corn, wheat, and sunflower oil, having consequences the world over, especially in the Middle East, with countries such as Egypt and Lebanon importing anywhere from 60 to 80% of its wheat and grains from both Ukraine and Russia. Because of its devastating impact on global food supply and prices, the UN has estimated that Russia's war in Ukraine could have pushed up to 49 million people into famine or famine-like conditions. This war has also made nations, in particular in the West, realize that food security encompasses the role of fertilizers and energy–and who controls them.
In light of this confluence of events, the agricultural sector is looking for potential answers to mitigate the current risks and challenges. According to the U.N. Food and Agriculture Organization, about 40% of the world’s soil has already been degraded. It is therefore clear that the current mode of farming practice is no longer tenable in a changing world. A potential solution could be regenerative agriculture, which aims to restore natural ecosystems that have been depleted by traditional farming methods and produce food by working with nature rather than working against it. This approach has the advantage of being applicable in all climates and circumstances. It will not only help farmers in Europe, Africa, and Asia to adapt to new environmental conditions but also prove a boon for Ukraine’s agricultural recovery.
While much has been written about the energy blackmail that Russia used from the onset of the war in February 2022, Moscow has also been weaponizing food very effectively. Now that food security has become much more of a pressing matter, nations are looking into solutions to be less dependent. It is a hopeful sign that while the end of the war seems extremely far away, both the public and private sectors have already committed to actively taking part in the reconstruction of Ukraine’s agricultural sector.
Olivier Guitta is the managing director of GlobalStrat, a security and geopolitical risk consulting company for companies and governments.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
More must-read commentary published by Fortune:
- ‘The global economy is due for a reality check,’ warns the central banks‘ bank
- Demand for urban real estate will be challenged for the rest of the decade. Here’s how the world’s superstar cities are projected to fare by 2030
- ‘The Feckless 400’: These companies are still doing business in Russia–and funding Putin’s war
- Great Place To Work CEO: ‘It’s time to acknowledge why diversity makes us uncomfortable’
