Photo by The Economist
"I read a lot of publications on this topic, and I see a mistake that is repeated by absolutely everyone, talking about the "Ukrainian grain" that saves the world from hunger and identifying it with wheat. This is not true - the problem is deeper and it is not seen, or just do not want to complicate. Below in more detail", - says Andiy Yarmak.
"The racists, and their grief analysts, are now very clumsily trying to justify that world hunger was not part of their plans. I suppose that this may not have been part of the plans (because their plans, like everything else, are nonsense), but the fact remains. At the very beginning of the war, my blog on the English version of the EastFruit website spoke about the prospects of world hunger as a result of the Russo-Nazis occupying Ukraine. Now everything is happening exactly as predicted. Finally, 80+ days after the start of the war, this threat began to be taken seriously in the world. But those who talk about the threat of hunger simply do not understand its true causes when talking about food grains. When they understand the real threat, they will start talking to the racists in a completely different tone.
And now about the wheat and "grain". If we take the Ukrainian agro-export, our main income comes from "grain" and "vegetable oils and products of their processing." But it would be more appropriate to divide these concepts into "food" and "feed for farm animals".
And here it is already becoming clear that Ukraine exports much more feed than food grain. Feed is the №1 of our agro-exports - corn, it is also meal of oilseeds (an even more important source of constant protein), and it is also soybean, which is the most important source of vegetable protein for livestock brееding.
And what is livestock brееding? This is an industry that has quite long production cycles. Therefore, if the shortage of wheat due to the cessation of its export from Ukraine, everyone began to feel almost instantly, given the time of freight, the impact of the cessation of feed exports begins to be felt gradually. And most countries are just beginning to understand this. And what will happen next? Now I will explain…
Consequently, feed has also become more expensive. And the least efficient producers in the Middle East, North Africa and Asia have begun to cut. Looking for a replacement on the spot, but miracles do not happen - local sources are all used anyway and also immediately became more expensive. But the population is falling, and meat prices are not rising fast enough to scare consumers.
But now we are on the verge of what is known in the meat market as the very beginning of the supercycle, that is, a sharp jump in the cost of feed, which leads to a sharp decline in livestock where production instantly becomes unprofitable, and then m yaso grow at times. In my opinion, the rapid decline in livestock in the above regions will begin in late May. This could take up to 3-5 months, after which, by the end of 2022, these countries will see space prices for meat.
And if the shortage of grain and rising bread prices cause dissatisfaction among the poor, expensive meat is very annoying to the middle class and rich people. And if both the poor and the middle class are dissatisfied, the conditions for problems will be ideal. Therefore, in September-October 2022, we will face a new wave of revolutions and local wars in the regions that are traditional markets for Ukrainian agricultural products. Wars do no good to anyone. The wars in the region are a rapid decline in income for all, including rich countries such as the EU and the United States.
! I would like to remind you that Ukraine is the largest exporter of protein feeds in the whole region. Other exporters are all very far away: the United States, Argentina, Brazil. And it is impossible to replace Ukraine in this market in principle.
Well, to China. The Chinese were clearly "stupid", believing the racists that they would quickly join Ukraine. Apparently they knew about the Kremlin's plans for war, because they had been stockpiling fodder and grain all year. But these reserves have already been exhausted. China is extremely vulnerable to changes in the global feed and meat market because it is a country of people who eat meat.
And what are all the totalitarian regimes in the world, including the Chinese, most afraid of? Dissatisfaction with the power of local residents! And even now the Chinese understand that they will not be able to prevent a sharp rise in feed and meat prices…
I think that our diplomacy should now speak to China not in the language of "grain" or in the language of "wheat", but in the language of "fodder" and "meat". Explain to the Chinese that doubling the price of chicken and pork could be far more dangerous for them than threatening to strengthen NATO.
And there is another totalitarian country like Turkey. Even there, the government is barely holding on, as Erdogan is surprised by the exchange rate and pressure on his national bank, causing rampant inflation and impoverishment. He may not be forgiven for further rising food prices. Especially for meat! And Turkey is one of the largest importers of our feed! That's why we need to speak the language of meat and fodder with Erdogan now!
I think that Erdogan, realizing his unpleasant prospects, will have to let NATO ships into the Black Sea, which will begin to protect Ukrainian territorial waters and ensure safe exports from the unblocked Ukrainian ports of the Black Sea. Please, diplomats, start talking about this, because our harvest is about to begin. And all this will take time.
This will give Ukraine an increase in foreign exchange earnings and stabilization of the economy during the war. And it will benefit all countries of the world. And this will practically remove the threat of an attack on Odessa and the threat of missile strikes from the waters, because these missiles will shoot down. Thus, the agricultural sector, as in 2014, can save Ukraine again. That is why grain and fodder are our powerful weapons.
Now about what to do in this situation for Ukrainian farmers who have livestock brееding. I think, and this is my personal view, that now is the best time to increase milk processing, milk production and especially meat! Why? See above. Rising world prices will create demand for Ukrainian products. And raw materials, ie feed, given the problems with exports, we now have cheap and will remain cheap. Accordingly, we have the conditions for a good margin.
I would raise this issue at the level of the Ministry of Agrarian Policy. This is a strategically advantageous direction, and perhaps there would be funds from at least donors to finance this thing. Because it will give a crazy return in the future", - Andriy Yarmak comments.
Source: Andriy Yarmak's Facebook page