With new atrocities being revealed on a daily basis, such as the bombing of the maternity ward and the death of children resulting from Russia’s attack on Ukraine, many are fearful of what this means for energy supply. But while cars need fuel and homes need heating, people need food and Schroders has put a price on the cost of this atrocious war for food supply, $30 trillion.
The statement from Mark Lacey, head of global resource equities, and Alex Monk and Felix Odey, both portfolio managers of global resource equities, said that more needs to be done by the companies that ensure food security and sustainability to create a sustainable food and water system to prevent negative consequences.
Russia and Ukraine together account for 30 percent of the world’s wheat exports, according to Schroders. Russia is also a key producer of the resources used in fertiliser products such as nitrogen, phosphate and potash.
The impacts and disruption of the conflict and sanctions will disrupt the trade of these commodities, according to Schroders, and impact crop yields in countries globally.
The firm said it was “particularly struck by a recent statement from Norwegian fertiliser company Yara which indicated the scale of potential crop shortages due to disruption to farming”.
Schroders said the issue could be further impacted if governments of richer nations, such as in the EU, start to intervene in agricultural markets by subsidising food prices in order to cap the inflation being felt by their citizens. This could lead to a scenario where the food availability gap between richer and poorer nations widens even more as prices are driven above what people can afford in countries that already suffer from food scarcity.
Schroders also outlined three structural changes needed to create a sustainable food and water system. These included more efficient and higher agricultural yields, enabled by technology, changes to global diets, including lower meat consumption, and a major reduction in waste and emissions. The $30 trillion figure is to cover the period from now until 2050 the firm qualified.
