Skip to main content Skip to footer

Agricultural Watch: Ukraine conflict about much more than politics

August 27, 2014
The Intelligence Bulletin

While the ongoing conflict in the Ukraine is dominated by geopolitical tussles between global role-players, it also impacts agriculture and global food security in more than one way.

The ongoing conflict in the Ukraine is primarily embedded in a political tussle between Russia, Kazakhstan and Belarus (the emerging Eurasian Economic Union) on the one hand and the European Union (EU) and the International Monetary Fund (IMF) on the other hand.

It seems, however, that agriculture in the Ukraine as well as global food security is in more than one way affected by the battle for this country.

“The stakes around Ukraine’s vast agriculture sector, the world’s third largest exporter of corn and fifth largest exporter of wheat, constitute a critical factor that has been overlooked. With ample fields of fertile black soil that allows for high production volumes of grains, Ukraine is the breadbasket of Europe” said Frederic Mousseau, Policy Director of the Oakland Institute and critic of the role the World Bank and the IMF are playing in the tussle for the control of in the Ukraine. According to Inter Press Service agriculture accounts for about 10% of Ukraine’s gross domestic product (GDP) and shipped over 30 million tonnes of grain out of the country last year. Farmers and agricultural workers made up 17% of the country’s workforce.

The battle for Ukraine intensified when the new government accepted a $17 billion loan from the IMF and $3.5 billion in aid.

“While global attention has been channelled towards the political crisis, sweeping economic reforms are being ushered in under the leadership of the newly elected president Petro Poroshenko Khanya D’Almeida of the Inter Press service wrote.

“These reforms sound good on paper, but when you look more closely you see they are actually designed to benefit large multinational corporations over workers and small-scale farmers” Mousseau explains his conspiracy theory.

“While the World Bank and the IMF often disguise their activities in developing countries under the objective of development, the case of Ukraine makes it clear that this is just Orwellian double speak. Their intent is blatant; to open up foreign markets to Western corporations”, Mousseau argues. But the news agency Reuters shed some light on the real problem for agriculture in the Ukraine – the country’s financial and political crisis toughened lending conditions during the country’s key spring sowing campaign.

The New Age newspaper reported that the biggest threat to crops comes from the severe cash crunch wrought by months of political crisis.

Ukrainian analysts said during the planting season that farmers might leave about 20% of arable land unsown due to a lack of funds. The resultant smaller area under cultivation could reduce Ukraine’s 2014 output by around 11 million tonnes and could hamper its export to countries with food shortages and impact on global wheat prices. But the problems of the Ukraine also has consequences for other countries like the United States of America which, along with other Western countries, instituted sanctions against Russia for its support of Ukraine rebel forces.

In retaliation, Russia blocked the import of chicken products and other food products from the USA.

Russia imported about $1.3 billion in USA food and agricultural products last year or about 11% of all USA exports to the country.

by Hennie Duvenhage