What do they have to do with fertilizers and the wheat with the war on Ukraine? Much more than it seems. In this article we explore the consequences of this conflict from a commercial perspective. Is Russia Prepared for a trade war as well as a military one? Why is the price of the fertilizers at the beginning of the invasion of Ukraine? Read on and find out!
Ukraine, the breadbasket of Europe
Russia is the breadbasket of the world, just as Ukraine is of Europe. The first can boast of the highest export figures globally. Meanwhile, the second can boast of assuming the 26% wheat what matters the European Union. Very significant figures that will give much to talk about. The current war in Ukraine may have many implications related to this cereal.
The first is that we do not know how long it will last or its outcome. We don't know for sure if it will scale or not. An excessive escalation or prolongation could result in fields going unharvested and Ukraine curbing its exports. On the other hand, Russia could also stop them as political weapon. That is, the sanctions on the Kremlin have already begun. RUnited Kingdom has closed its airspace to the airline Aeroflot while Canada has restricted exports to the ex-Soviet power.
Against this background, Russia may choose to adopt counter-sanctions with which to damage the economy of its geopolitical rivals. This is when he would decide to divert wheat exports to Asian countries that do not get involved in Putin's decisions. Iran, Central Asia or even China, giant that lacks sufficient agricultural resources. The consequence of the measure would be a huge increase in the cost of the basic food basket in the West.
Fertilizers and Ukraine: why will their price rise?
Another asset that Russia reserves in a possible trade war is energy. Let's be clear: the European Union depends on Russia to guarantee its supply of gas y oil. Let us bear in mind that Russia supplies the UE 40 percent of the gas it consumes. Closing the tap is not only a setback for the heating system, it goes further. In addition to inflation, a palpable consequence would be the increase in the cost of fertilizers. This would further increase the price of the basic basket.
The war between Russia and Ukraine makes essential food more expensive 🧵
🇺🇦 It is the great granary of Europe and one of the largest grain exporters in the 🌎
Almost 75% of its production is exported and if we add the export in that category of 🇷🇺 they represent 28% of the wheat sold 🌎
– AnthropoSabores (@AnthropoSabores) February 25, 2022
Why? Because Russia It is one of the world's largest producers of cheap fertilizers. More specifically, it is the second in production of potash. This nutrient is of vital importance for crops that improves water retention, yield, nutritional value, flavor, color, texture and texture. disease resistance. What we want to highlight is that the price of these fertilizers had been rising for some time. The cause is the increase in the price of gas.
What does it have to do? Well, it turns out that, although many people do not know it, this fossil fuel is essential when making fertilizers. We are waiting for the governments of the Western bloc to announce their sanctions against Russia and this country its own against the West. Who will be hurt the most? We have the theory that the West, since Russia can relocate its products in allied countries in Asia or even Africa. Those who will lose, yes or yes, will be the consumers when they see how bread rises from one day to the next.
