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Disruption in food supply chain and other essential products

Disruption in food supply chain and other essential products

The inflation in food prices is one of the significant issues that governments are facing around the globe. The food prices have skyrocketed like never before! All the supplies to and from Ukraine have come to a complete halt. Most of the areas in Russia are declared sensitive due to security concerns, so the disruption in food supply chain continues there as well! 

In addition to the security issues in the region, the US govt and European Union sanctions are preventing other countries from importing and exporting. It has resulted in disruption in supply chain for food supplies, raw materials and petroleum. 

Sanctios on Russian oil and its impact on european union! 

Russia is one of the three oil producers in the world, standing just behind Saudi Arabia and The United States. Lithuania, Finland, Slovakia, and Poland depend heavily upon Russian Oil. Around 50% to 80% of their Oil imports come from Russia. Russian Oil demand doesn’t stop here; it expands worldwide, especially in Europe. European Union has condemned the military action taken by Russia in Ukraine. They have put forward strict measures to stop the Russian invasion of Ukraine, and all the European Union countries and the United States have decided to stop the imports of Russian Oil. 

Two-fifth or almost 20% of the EU’s oil comes from Russia, which is a huge number. Russian oil prices are comparatively low compared to other exports in the region. So since the imports have been stopped, the prices of oil are higher than ever before! It is creating a bunch of problems for the industrial sector as now they have to bear extra expenses and raise the prices of their products.

Food industry and the oil prices

Every industry is heavily impacted by transportation and logistics operations, which are an integral part of any supply chain. Each industry requires a seamless and economical supply of petroleum, and since Russia is abundant in oil, it can provide that quite easily. But now with Russia out of the picture, industries are struggling to find a just replacement.         

Food industries have always been concerned with oil and petroleum prices as the price of their product and oil prices go up and down simultaneously. The supply chain for food products is much more deliberate as compared to other products. They have little to no margin of error, the timing of logistics and seamless transportation to preserve food is essential and must be available at all times. These industries can’t wait for the oil prices to go down to continue their operations, so they go with whatever rates are presented at the current time, which causes the prices of food products to go up. And once the food prices get high, it creates a domino effect, and everything in the region starts to go up.

Food supplies from Ukraine and Russia

Ukraine is one of the major exporters of whole foods in Europe and Africa. Ukraine is known for its export of wheat and grains, and Russia is specifically targeting the areas of fields and other natural resources. The attacks have significantly impacted the supply of food in Europe. 

The discontinuation has caused the prices of everyday items to go up, and with petroleum prices already high, the combination of both is raising a lot of eyebrows regarding the food prices in Europe and the future of the supply chain as a whole.

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