The conflict between Ukraine and Russia completed two years last Saturday, February 24th. This date marks a period of reflection on the impacts on the commodities market, especially in the agricultural sector. In addition to the devastating humanitarian consequences, this conflict has redefined the dynamics of the global economy, significantly influencing agribusiness and commodity logistics.
To deepen our understanding, we conducted interviews with customers and partners from both countries, seeking to understand the consequences of this confrontation.
Impacts of war on agribusiness
The war resulted in a reduction in cultivable areas in Ukraine due to occupied territories and the presence of mined areas, leading to a decrease in agricultural production. These effects are worsened by the destruction of logistics infrastructure, including ports and main shipping routes, further complicating commodity exports. In contrast, Russia faces similar challenges, with dependence on imported seeds and international sanctions negatively affecting the agricultural sector. Currency devaluation and rising production costs intensify these problems, reducing farmers' profit margins and discouraging the expansion of plantations.
Adaptation and resilience strategies
Ukraine, facing export challenges due to the Red Sea conflict, innovated by using ports from neighboring nations such as Romania, Bulgaria and Poland, diversifying its foreign trade routes. Although this strategy strengthened the logistics infrastructure of these intermediary countries and guaranteed the continuity of Ukrainian exports, it generated local tensions. Producers from transit countries expressed dissatisfaction with unfair competition, resulting in border strikes and new duties on Ukrainian products, aiming to balance competition with national products. Russia, in turn, responded by diversifying its export markets and developing alternative transport routes, mainly through Russian territory and towards China, reducing dependence on traditional maritime routes and minimizing the effects of sanctions.
Both countries face challenges in maintaining and establishing new trade partnerships. Ukraine has struggled to maintain its traditional export markets, while Russia, according to Alexander Kalinin of Advag Russia, has managed to expand its interactions with countries outside the European market, strengthening trade relations with China, North Africa and the countries of Middle East. This reorientation of trade reflects a strategic adaptation to the new geopolitical and economic realities imposed by the war.
Future perspectives
In the long term, the war in Ukraine and its global fallout will likely continue to influence the commodities market. Furthermore, agribusiness and logistics in the countries involved will have to continue adapting to a constantly changing environment. On the other hand, the capacity for innovation, the diversification of export markets and the improvement of logistics infrastructure will be crucial to overcoming the challenges posed by war and international sanctions. Furthermore, the war also forces a reassessment of global supply chains and highlights the importance of resilience and flexibility in agribusiness and logistics operations.
We will continue to closely monitor the evolution of this conflict and its consequences for agribusiness, aiming to keep you updated. Follow us on social media or consult our experts for more information.
Information collection by Júlia Vilela and Laura Pereira | Specialists in Sunflower oil and olive oil
By Vanessa Ferreira
