Global Agricultural Dynamics Post-Ukraine Conflict: China's Emergence as a Grain Power
The Russia-Ukraine war has significantly altered agricultural production and supply chains, with China emerging as a leading player in global grain stocks.
The ongoing conflict between Russia and Ukraine has reshaped global agricultural dynamics and supply chain relationships.
The impacts of nearly three years of war are evident not only in the belligerent nations but also on an international scale, particularly affecting the agricultural sector.
The energy market has also experienced shifts, notably influencing prices, especially that of gas.
In Italy, agricultural production costs have increased.
Between 2021 and 2023, Italian farms reportedly faced a 21% increase in average expenditure for intermediate consumption, with energy and fertilizer costs constituting approximately 25% of total consumption, up from 20% before the onset of the war.
The global wheat supply scenario has notably changed, particularly with China's growing stockpiles.
A report titled 'Three Years of War,' conducted by the Divulga Research Center, examines the repercussions of the conflict on agricultural production in Ukraine.
Historically significant for global supplies of various crops such as sunflower seeds, wheat, corn, and cereals, Ukraine is currently facing substantial agricultural production challenges.
In 2024, the Food and Agriculture Organization (FAO) has supported over 45,000 rural families in Ukraine, alongside approximately 4,700 farmers.
It is estimated that an additional $150 million in agricultural aid is required, adding to the $180 million allocated in the first year of the war and $205 million in the second.
Regions occupied by the Russian military are said to account for around 60% of Ukraine's sunflower production capacity, 51% of its wheat, and over 18% of its corn.
These circumstances have led to a dramatic decline in Ukrainian wheat production, which plummeted from 33 million tons in the 2021-2022 period to 23 million tons (-30%) in 2023-2024. In contrast, Russia has seen a 22% increase in its wheat production, rising from 75.2 million tons to 91.5 million tons, thereby solidifying its position as the fourth-largest wheat producer globally, following China (136.6 million tons), the European Union (135.1 million tons), and India (110.6 million tons).
Projections for 2024-2025 indicate this trend will continue.
Similar trends are observed in corn and sunflower seed production.
The EU's establishment of solidarity lanes in May 2022 provided alternative logistical routes for Ukrainian agricultural exports trapped due to the conflict and tensions in Black Sea ports.
These lanes have also facilitated the export of around 60 million tons of non-agricultural goods, like minerals, timber, and steel, amounting to a total trade value of €157 billion.
A geopolitical analysis within the same report highlights a shift in agricultural commodity stockpiling dynamics, positioning China in a crucial role.
As of now, China holds 51% of the world's wheat stocks.
Estimates for the 2024-2025 agricultural year predict a decrease in the EU's stock share from 6% to 4%, while the shares for the United States and China are projected to rise to 8% and 53%, respectively.
The conflict is likewise affecting corn stocks, with China expected to account for nearly two-thirds of global stocks (65% in 2024).
The fluctuations in wheat and corn offered by major global players, along with stock variations, directly affect the prices received by farmers.
In Italy, during the initial months of the war, wholesale prices for corn and wheat peaked.
However, farmers did not substantially benefit from price increases, as market dynamics absorbed significant portions of these hikes.
Following these rises, prices saw notable declines: by January 2025, the price of durum wheat decreased by 40% compared to January 2022, reaching €334.5 per ton; soft wheat dropped by 17.4% to €263.5, and corn fell by 10.4% to €258.
Energy supply dynamics in Italy have also evolved.
Prior to the conflict, Italy imported 40% of its natural gas and 11% of its oil from Russia.
In the first 11 months of 2024, Russian gas imports decreased by 81% compared to 2021. During the same period, imports from Norway and the United States surged by 343% and 339%, respectively.
Algeria and Azerbaijan have also bolstered their positions as key suppliers to Italy, providing 42% and 15% of imported volumes respectively.
The country's oil imports from Russia have virtually ceased, while imports from Kazakhstan and the United States increased by 332% and 86%, respectively.
Together, these nations now account for over one-fifth of Italy's energy supplies, up from just 6.8% before the war.
The impacts of nearly three years of war are evident not only in the belligerent nations but also on an international scale, particularly affecting the agricultural sector.
The energy market has also experienced shifts, notably influencing prices, especially that of gas.
In Italy, agricultural production costs have increased.
Between 2021 and 2023, Italian farms reportedly faced a 21% increase in average expenditure for intermediate consumption, with energy and fertilizer costs constituting approximately 25% of total consumption, up from 20% before the onset of the war.
The global wheat supply scenario has notably changed, particularly with China's growing stockpiles.
A report titled 'Three Years of War,' conducted by the Divulga Research Center, examines the repercussions of the conflict on agricultural production in Ukraine.
Historically significant for global supplies of various crops such as sunflower seeds, wheat, corn, and cereals, Ukraine is currently facing substantial agricultural production challenges.
In 2024, the Food and Agriculture Organization (FAO) has supported over 45,000 rural families in Ukraine, alongside approximately 4,700 farmers.
It is estimated that an additional $150 million in agricultural aid is required, adding to the $180 million allocated in the first year of the war and $205 million in the second.
Regions occupied by the Russian military are said to account for around 60% of Ukraine's sunflower production capacity, 51% of its wheat, and over 18% of its corn.
These circumstances have led to a dramatic decline in Ukrainian wheat production, which plummeted from 33 million tons in the 2021-2022 period to 23 million tons (-30%) in 2023-2024. In contrast, Russia has seen a 22% increase in its wheat production, rising from 75.2 million tons to 91.5 million tons, thereby solidifying its position as the fourth-largest wheat producer globally, following China (136.6 million tons), the European Union (135.1 million tons), and India (110.6 million tons).
Projections for 2024-2025 indicate this trend will continue.
Similar trends are observed in corn and sunflower seed production.
The EU's establishment of solidarity lanes in May 2022 provided alternative logistical routes for Ukrainian agricultural exports trapped due to the conflict and tensions in Black Sea ports.
These lanes have also facilitated the export of around 60 million tons of non-agricultural goods, like minerals, timber, and steel, amounting to a total trade value of €157 billion.
A geopolitical analysis within the same report highlights a shift in agricultural commodity stockpiling dynamics, positioning China in a crucial role.
As of now, China holds 51% of the world's wheat stocks.
Estimates for the 2024-2025 agricultural year predict a decrease in the EU's stock share from 6% to 4%, while the shares for the United States and China are projected to rise to 8% and 53%, respectively.
The conflict is likewise affecting corn stocks, with China expected to account for nearly two-thirds of global stocks (65% in 2024).
The fluctuations in wheat and corn offered by major global players, along with stock variations, directly affect the prices received by farmers.
In Italy, during the initial months of the war, wholesale prices for corn and wheat peaked.
However, farmers did not substantially benefit from price increases, as market dynamics absorbed significant portions of these hikes.
Following these rises, prices saw notable declines: by January 2025, the price of durum wheat decreased by 40% compared to January 2022, reaching €334.5 per ton; soft wheat dropped by 17.4% to €263.5, and corn fell by 10.4% to €258.
Energy supply dynamics in Italy have also evolved.
Prior to the conflict, Italy imported 40% of its natural gas and 11% of its oil from Russia.
In the first 11 months of 2024, Russian gas imports decreased by 81% compared to 2021. During the same period, imports from Norway and the United States surged by 343% and 339%, respectively.
Algeria and Azerbaijan have also bolstered their positions as key suppliers to Italy, providing 42% and 15% of imported volumes respectively.
The country's oil imports from Russia have virtually ceased, while imports from Kazakhstan and the United States increased by 332% and 86%, respectively.
Together, these nations now account for over one-fifth of Italy's energy supplies, up from just 6.8% before the war.
Translation:
Translated by AI
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