UKRAINE VS RUSSIA WAR

INTRODUCTION

On 24 February 2022, Russia officially attacked Ukraine several months after the deployment of
the military bases close to the border with Ukraine. The ongoing military action raises concerns about its
potential impact on the global economy and particular on the reaction on the global financial markets.
As a conflict between two major agricultural powers, the Russia-Ukraine war has various negative
socioeconomic impacts that are recently felt internationally. Simultaneously, the war came at a bad time
for global food markets because food security because food prices were already high due to disruption
in the supply caused by the COVID-19 pandemic, strong global demand, and poor harvest in some
countries.

IMPACT OF WAR IN GLOBAL FOOD SECURITY

Understanding how conflict-related disruption in global food and fertilizers markets might affect
price and availability is critical for understanding the overall impact on global food security. The war
resulted in immediate and far-reaching cascading consequences on global food security: Ukrainian
exports have stopped, conscription and population displacement have caused labor shortages, access to
fertilizers is restricted, and future harvests are uncertain. First, Ukraine’s export capacity has been
hampered. Secondly, conscription and population displacement caused labor shortages. Thirdly, access
to vital agricultural products such as fertilizers is also constrained. The war may delay spring planting
and winter crop harvesting. Further, the war has indirect and cascading effects. Indeed, rising fertilizers
costs may reduce their use and crop yields. The war triggered a panic buying movement at country and
individual levels.

IMPACT IN THE PHILIPPINES

Economic shocks caused by Russia’s attack on Ukraine and the ensuing global sanctions could
impact growth in Southeast Asia, including the Philippines. In the report published on Tuesday, April 5,
the multilateral lender said that while the regions dependence on Russia and Ukraine in terms of goods,
services, and capital is limited, the sanctions related to the invasions would push up international prices
of food and fuel, hurting consumers and economic growth. In the case of the Philippines, the World
Bank estimated that poverty incidence could increase by one percentage point, equivalent to 1.1 million
people, should cereal prices rise an average of 10% over the year. These people who live with a daily
budget of $3.20 (P163.81) or lower. The poverty incidence among Filipinos rose to 23.7% in the first half
of 2021, equivalent to 26.1 million Filipinos, based on the official poverty statistics of the Philippine
Statistics Authority (PSA). This is higher than what was recorded in 2018, when the poverty incidence
was 21.1%, equivalent to 22.26 million Filipinos. This translates to 3.9 million more Filipinos living in
poverty amid the coronavirus pandemic.
 The World Bank also noted that spikes in fuel prices impact people’s real income. “As we would
expect, relatively import dependent Philippines, China, and Thailand, see a contraction in real income –
of between 0.5% and 1.5% - while the net exporter, Malaysia, sees an increase in real income of 0.3%.”
The PSA earlier said a family of five now needs at least P12, 082 to meet the most basic food and non-
food needs, 14.7% higher than the monthly average of P10, 532 in 2018. The PSA reported that the
inflation rate jumped to 4% on March, driven mainly by faster upward movements of fuel and food
costs. The Philippine government has distributed fuel subsidies and cash aid for poor households to
cushion the impact of rising fuel prices, but President Rodrigo Duterte himself has acknowledged that
the cash aid is too small.

The volatility of oil prices has a directly proportional relationship with inflation hikes, inflation
rates will also rise because almost all industries use oil. And this leads to rising as well on production
costs that the burden will now be shifted to the consumers, increasing the prices of goods and services.
If you ever heard of the ongoing Russia-ukraine war on the news, just so you know it has continuously
affected the Philippines since last march 2022. The inflation rate in 2022 continues to rise, the highest
increase in the indices of transport, food and non-alcoholic beverages, housing, water, electricity, gas,
and other fuels have been recorded highest.

PHILIPINE AGRICULTURE

The war between Ukraine and Russia will impact not only oil prices, but also in agricultural
commodities and likely lead to weaker trade in the Philippines, according to international think tanks.
The volatility of agricultural product prices has also effects on the inflation rate in 2022 in the
Philippines. Of course, the oil price hikers, so as the food prices as well, an industry that uses oil to
transport their good to the different parts of the country, which in turn drives the headline inflation up.

While the country has only been slowly recovering from these crises, it took another disaster for
the Philippines to plunge into another devastation – probably the greatest of them all – the Ukraine and
Russia conflict. This ongoing war has fueled food insecurity to the highest power. Food insecurity is now
inclined to be an even more threatening trend, with the two power countries at war being among the
breadbaskets of the world. This means that export activities are challenged, putting other dependent
countries vulnerable, including the Philippines. The rising prices on energy, oil, fertilizer, wheat and
wheat products, and add to that the export bans being imposed by other countries to “protect their own
people” continue to put many countries at risk, especially the Philippines, who is reliant on these key
producing countries to fill local production gap. Needless to say, the Ukraine crisis accentuated the
discrepancies and inequalities in food production, thus the humane necessity to fill the gap through
importation.

In the most basic sense, importation is allowed for an economy to thrive – to supply
nonexistence and scarcity of products and goods, reduce domestic food prices, and provide wider choice
in consumer goods, to name a few. Agricultural trade does not only happen in the Philippines, rather it is
a global phenomenon that helps stimulate economies.
“We continue to put premium on protecting our farmers and fishers. Our goal has always been geared
toward food security, eventually leading to food sovereignty. We only allow imports to fill in the deficit
or what we cannot produce locally,” the DA chief said.

“Even President-elect Ferdinand “Bongbong” Marcos Jr., who included food sovereignty as one of his
priority agenda, mentioned how importation is being forced on us simply because local production is not
sufficient,” Secretary Dar added.

REFERENCES:
https://www.worldbank.org/en/news/press-release/2022/10/04/russian-invasion-of-ukraine-impedes-
post-pandemic-economic-recovery-in-emerging-europe-and-central-asia

https://www.rappler.com/business/world-bank-sees-russia-ukraine-war-likely-worsening-poverty-
philippines/

https://www.agri-pulse.com/articles/17786-philippines-slashes-corn-import-tariff-to-counter-ukraine-
wareffects#:~:text=The%20Philippines%2C%20citing%20the%20impact,opportunities%20for%20U.S.
%20corn%20farmers.

https://www.philstar.com/business/2022/02/26/2163363/ukraine-war-weaken-philippines-trade-think-
tanks

https://capital.com/philippines-inflation-rate-medalla-bank-governor

https://www.bria.com.ph/articles/what-should-you-expect-in-the-philippine-inflation-rate-for-the-2022-
2nd-quarter/#:~:text=The%20inflation%20rate%20in%202022%20continues%20to%20rise%2C%20the
%20highest,fuels%20have%20been%20recorded%20highest.

https://powerphilippines.com/explained-how-russia-ukraine-conflict-can-affect-local-oil-prices/

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9368568/

https://www.da.gov.ph/facing-the-big-challenges-in-philippine-agriculture/