Food costs rise on Russia-Ukraine war

Lawmakers must closely monitor the development to prevent any sudden increase in various prices of goods, experts say


MALAYSIA’S food security could suffer in the mid- to long-term period as the Russia-Ukraine conflict is expected to cause a surge in price of fertilisers as well animal feed and crops.

Experts said lawmakers should keep a close tab on this development as the country is still reeling from the pandemic shock that saw an increase in various prices of goods in recent months.

Khazanah Research Institute deputy director of research Dr Sarena Che Omar said for example, the conflict may cause rises in global natural gas prices which is a key ingredient to make fertilisers.

“Rise in global fertiliser prices may then subsequently cause increases in the cost of animal feed and crops. So indirectly, we may be impacted this way, but it is not easy at this stage to specifically calculate how exactly that impact would be to our local food prices.

“For the immediate and direct impact, it will not adversely affect our national food security as Malaysia doesn’t rely on Ukraine or Russia for key food imports. We are not immediately impacted with the supply of key food items from them, particularly for wheat and corn. So, in the short term, we are okay,” she told The Malaysian Reserve (TMR).

Russia’s invasion of Ukraine has destabilised European security and the global energy market, and food could be next.

Dozens of countries across the Middle East, South Asia and North Africa that already suffer from food insecurity rely on Russia’s and Ukraine’s bountiful supplies of wheat, corn and vegetable oil, and experts said the conflict could send food prices rising and increase global hunger.

EMIR Research head of social, law and human rights Jason Loh Seong Wei said even though Malaysia relies on Russia for imports of fertilisers, it’s only part of the top five countries and the total value of all chemical fertilisers (potassic, phosphatic, nitrogenous and others) was US$76.82 million (RM321.88 million) in 2020.

Malaysia, he said, can still continue to source from countries like China and Central Asia, for fertilisers.

However, we would still have to prepare to pay for higher prices due to the spike in natural gas.

“The conflict could raise the price of food such as our locally grown vegetables and fruits since much of our fertilisers are currently imported. Perhaps the price of locally grown lettuce and tomatoes might increase as a result. Other vegetables that could be potentially affected would be long beans, okra (lady’s finger), sawi (mustard green), pumpkin, bitter gourd and watercress.

“Nonetheless, our food security for now in the short- to medium-term isn’t drastically impacted. As it is, it is the price of transportation and inputs that are affected and not the quantity of food supply,” he told TMR.

According to the World Bank, fertiliser prices are only expected to ease in 2022 but that could now change following Russia’s military aggression on Ukraine.

“Much of the inflationary pressure will be indirect in the form of higher oil and gas prices and by extension the impact on the costs of logistics and transport, and products such as fertilisers. This is where the government will continue to monitor, and it is hoped to respond accordingly,” he added.

EMIR Research CEO and president Datuk Dr Rais Hussin Mohamed Ariff had called for a bankable food security ecosystem which combines critical infrastructure and cutting-edge tech to normalise volatility in local food markets from shortages due to political sanctions, market inefficiencies, environmental issues or public health crises.

He said modern storage technologies radically improve food security, safety and quality by reducing food spoilage, building reserves of commodities and ensuring optimal long-term storage. It balances an urgency to alleviate sudden shortages with the quest for durable solutions.

“Over the next decades, we must prepare for natural disasters, high population densities and recurrent waves of new pandemics — all of which highlight the urgent need to build farming systems that are more durable and resilient,” he said in his research article title “A bankable food security system”.