Explained | What makes Ukraine a ’breadbasket’ to many countries

According to the UN Food and Agriculture Organisation (FAO), Ukraine is the fifth largest exporter of wheat in the world.

March 12, 2022 03:44 pm | Updated 07:32 pm IST

A wheat field is pictured near the village of Zhovtneve, Ukraine. File

A wheat field is pictured near the village of Zhovtneve, Ukraine. File | Photo Credit: Reuters

Other than concerns about oil and finance, Russia’s geopolitical actions in the Ukraine have unsettled the latter’s services as the ‘breadbasket’ to several countries. According to United Nations’ Food and Agriculture Organisation (FAO), Ukraine is the fifth largest exporter of wheat in the world. It held a global market share of 10% between 2016-17 and 2020-21.

Additionally, the U.N. Comtrade data shows Ukraine’s total cereals export in 2020 was $9.4 billion, resulting in a trade surplus of $9.2 billion in the segment. Its top countries of import in the cereal segment were China ($1.9 billion), Egypt ($1.1 billion), Indonesia ($546.7 million) and Spain ($543.2 million).  

Output and export 

The Ukranian Ministry of Agrarian Policy & Food’s latest data for the marketing year 2021-22 stated, as of Feb 23, 17.9 million tonnes of wheat, approx. 5.62 million tonnes of barley, and 18.9 million tonnes of maize was exported. 

The State Statistics Services of Ukraine (SSU) informs the country produced 32.7 million metric tons (MMT) of wheat, 9.6 MMT of barley, 39.8 MMT of maize, 616,120 MT of rye and almost 40 MMT of corn, as of Dec 31, 2021. Total area under harvest for wheat stood at 7.1 million hectares, barley at 2.5 million hectares, about 5 million hectares for maize, under 5 million for corn and 172,000 hectares for rye.  

The FAO forecasts that Ukraine would export 6 million tonnes of wheat and 16 million tonnes maize for the remainder of the 2021-22 season (March 1-June 30). FAO cautioned the estimates do not include the impact of the ongoing geopolitical tensions. It informed that Ukraine represented 9% of the global market share in the segment in 2021. Russia, on the other hand, is expected to export 8 million tonnes of wheat and 16 million tonnes of maize during the same period. 

30% grains from Ukraine are exported to countries in the European Union whereas half of the overall export volume reaches Asia and North Africa, the UN organisation had stated earlier.  

Amongst the largest importer of wheat globally, Egypt draws most of its supplies from Russia, Ukraine and Romania. Russia and Ukraine collectively cover approx. 70% of Egypt’s imported wheat demand.  

Additionally, the two countries might not be Indonesia’s major trading partners but the conflict is expected to extend to its food ingredient imports, particularly Ukranian wheat, Jakarta Globe quotes Lestary Barany, Research Assistant at Center for Strategic and International Studies. “Ukraine is Indonesia’s top wheat supplier. But many of its wheat granaries are in the eastern region, which is in close proximity to where the Russian troops have been deployed. So, the threats on the supply side are increasingly felt,” he added, as per a Jakarta Globe report. 

The economics of productivity 

The suggested ‘breadbasket’ thrives on its strategic location, ecological conditions and institutional measures.

According to the World Bank, the availability of the black ‘chernozem’ soil rich in organic matter called humus gives the Ukranian agriculture an edge. “Covering more than half the landmass of Ukraine, chernozem soil offers exceptional agronomic conditions for the production of a large range of crops, especially cereals and oilseeds,” it states.

Ukraine’s access to deep sea ports in the Black Sea permits direct approach to Russia and European Union along with the grain importers of the Middle East and North Africa.

FAO states agriculture plays an important role in the Ukrainian economy. Its share in the GDP grew from 6.3% in 2007 to 9.3% in 2020.

Ukraine instituted support schemes for small and medium sized producers. The Organisation for Economic Development (OECD) notes that area payments are higher for newly established farms during the first three years after their creation than for older farms. Additionally, the stipulation is that eligible land is used for farming purposes. Another measure provides partial reimbursement of up to 30% of the investment for construction or reconstruction of grain storage and processing capacities.

Sale and purchase of agricultural land continues to be cumbersome in Ukraine despite the government opting not to extend the moratorium on the sale of agricultural land.  

Hitler wanted a slice of the ‘breadbasket’ 

Professor of History Gesine Gerhard in her chapter titled ‘Food and Genocide: Nazi Agrarian Politics in the Occupied Territories of the Soviet Union’ writes that Nazi agricultural experts believed exploiting agricultural production in the western part of the Soviet Union would solve the food crisis in Europe. Further, it would speed up extermination of ‘undesirable people’. 

The Nazi Operation ‘Barbarossa’ for invasion of the Soviet was unsuccesful. Poor strategic planning, underestimating the Soviet capabilities and untimely supply of logistics contributed to their failure.   

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