The Russian invasion of Ukraine highlights how dependent on others we have become

As the unprovoked Russian bombardment of Ukraine’s cities, towns and civilians continues, we look on in horror at the carnage that unfolds daily in front of our eyes. In disbelief that such terrors can still be wrought in Europe in the twenty-first century. But beyond the awful human toll of this war, it highlights also the worrying extent to which we have become dependent on other nations for the food, fuel and other things that sustain us.

This isn’t, of course, the first time our supply chains have come under pressure. Severe weather in recent years has disrupted deliveries to supermarkets. When the Ever Given managed to wedge itself across the Suez Canal last year, supply chains across the board went haywire. And we’re only now coming to grips with the impact of Brexit on our ability to trade with even our closest neighbours.

But the war in Ukraine is different. And not just because many counties around the world rely on Ukrainian (and Russian) exports. But because, whatever the eventual grisly outcome of Russia’s belligerence, it heralds what is likely to be a permanent change to the global political, economic and social order. And that’s going to affect all of us.

Given that many people might previously have struggled to find Ukraine on a map, its contribution to global supply chains is remarkable. It is, for example, one of the world’s major suppliers of wheat. And while this year’s harvest has already been planted, the conflict is hampering Ukrainian farmers’ ability to apply essential fertiliser. And whether they’ll actually be able to harvest it later in the year, and to plant next year’s crop, is anybody’s guess.

Ukraine is also a major supplier of other agricultural products, such as sunflower seeds and oil, maize and animal feeds. And while the UK depends primarily on its European neighbours for its food imports, countries across North Africa and the Middle East depend heavily on Ukrainian exports to feed their people.

And it’s not just Ukraine. Russia is also a leading exporter of basic foodstuffs, as well as of oil, natural gas and fertiliser. And industrial metals such as nickel, which is used in the batteries that power electric vehicles. But Russia’s aggression and the resulting sanctions on and boycotts of the nation’s companies, exports and shipping vessels mean that trade flows in these goods are drying up.

The initial consequence of this disruption is increased prices. And I’m not talking slight increases, either. Prices are rocketing up. The price of oil has almost doubled since the start of the year, reaching its highest level for nearly 14 years. This has had a knock-on effect on the cost of petrol and heating oil, with fuel prices at the pump exceeding £1.55 a litre and set to rise further. That’s 85 quid to fill up a medium-sized hatchback.

The wholesale gas price has surged by 33% this morning alone, to trade at a value almost twenty times what it was going for twelve months ago. The cost of wheat has rocketed up 150% since last summer and the wholesale price ticker continues to head visibly northwards even as I write this.

And the price of nickel got so out of control, jumping yesterday more than 70% to reach in excess of $100,000 a tonne, that the London Metal Exchange had to suspend trading while everyone calmed down.

But price rises are just the start. After that come the shortages. We’re seeing them already with grain and other agricultural products. We’ll no doubt see them with oil and gas, too. And it’s going to get ugly. Just yesterday, the head of the World Food Programme warned that rising food prices will have a catastrophic impact on counties such as Lebanon, Yemen, Syria and Tunisia, who rely on wheat from Ukraine.

While we in the UK are, thankfully, not as reliant on Ukraine for our food as our brothers and sisters in North Africa and the Middle East, we do import things like agricultural fertilisers. And we (to a certain extent) and our European neighbours (to a massive extent) do rely on Russia for natural gas to power our industry and to heat our homes.

In fact, we rely on other counties for many of the things that we need to stay alive. We import 45% of the food that we consume, with the bulk of these imports being made up of things as basic as fruit and vegetables, meat, beverages, cereals, dairy products and eggs. And we import around a third of the energy that we consume.

When it comes to global price rises, food shortages and energy disruption, we’re most definitely not immune. These things can, and will, happen here, too. Indeed, they’re happening right now. And this is before we even start to think about the impact of climate change, which will make our current supply chain woes look like the good old days.

Our priority at the moment needs, of course, to be supporting the people of Ukraine in the face of the ongoing Russian invasion. We must help those who have fled as well as those who remain. We must also do what we can to help those around the world, including right here at home, who are suffering from the war’s knock-on effects.

But at some point, and some point very soon, we’re going to need to think seriously about our own food and energy security. Because what’s happening in the global trade of food, commodities and energy isn’t a one-off. It’s happened before. It’ll happen again. And it’s going to get a whole lot worse.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s