Ukraine Targeted Analysis

In the near term, the direct impacts of conflict in affected areas of Ukraine east of the Dnipro¹ River would likely:

• Significantly disrupt livelihoods, including during the agricultural growing season, through physical access constraints and damage to homes, productive assets, agricultural land, roads, and other civilian infrastructure. Millions of people would also be at risk of losing access to critical income sources, including government-provided pensions and social safety nets, should territory change hands.

• Result in high levels of population displacement as households in affected areas east of the Dnipro River flee to safer areas, especially to western Ukraine. Hundreds of thousands to millions of displaced households separated from assets and typical sources of income would likely need immediate assistance, particularly during the ongoing winter season when fuel needs are highest. Households without sufficient resources living in temporary locations would be expected to need sustained humanitarian assistance until livelihoods are re-built in new, permanent locations.

• Severely disrupt production of cereals (mostly wheat and maize) and other key crops including oilseeds, as areas east of the Dnipro River produce around half of national wheat, maize, and sunflower seed production. This would have a significant impact on domestic supply in eastern Ukraine.

• Disrupt market access for traders and households, with periods of localized supply shortages possible in areas where conflict blocks transportation routes and where local production is insufficient. Prices would likely increase in the short term where supply is disrupted. It is possible that Russian forces cut off supplies of food and essential non-food commodities—such as fuel and medicine—from particular areas for prolonged periods as a strategy to pressure Ukrainian forces and authorities.

^{[1] Other spellings include “Dnieper” and “Dnepr.”}

In addition to short-term disruptions to domestic agricultural production due to the direct impacts of conflict, Ukraine’s production and export potential would likely significantly reduce in the medium and long term due to challenges in accessing agricultural inputs, disruptions to port access, and trade restrictions and international sanctions imposed on Russia. This would negatively impact Ukraine’s national economy due to loss of important export revenue and foreign exchange. While some producers of exportable agricultural commodities in western Ukraine could benefit from rising global prices and increased demand, benefits would be limited by the capacity of storage and port infrastructure. 

A significant and prolonged impact on international grain markets and prices would be likely due to declining Ukrainian exports to the world market. According to USDA forecasts, in the ongoing 2021/22 marketing year, Ukraine is projected to be responsible for 12 percent of global wheat exports and 17 percent of maize exports. Given generally favorable global production forecasts, many buyers would likely source wheat and maize, or cheaper substitutes, from alternative markets. However, given the high share of Ukrainian grains in total global exports, a significant shock to Ukrainian grain exports would reduce supply relative to earlier forecasts, driving up global prices that are already rising due to the political tensions in the region. It additionally remains possible that global production forecasts continue to be revised downward, and any impacts of international sanctions on Russia that would disrupt Russian energy and grain exports would result in even higher global prices.

• As has been seen in previous global food price crises, poor countries that are highly reliant on imports for their staple food supplies are more vulnerable to global price shocks. Higher staple food prices in vulnerable countries would further constrain resources of poor households, exacerbating the scale and severity of existing food insecurity, with poor urban households among the worst affected due to high market dependence.

• Several countries in the Middle East, North Africa, and Asia regions (including Lebanon, Tunisia, Libya, Pakistan, and Indonesia) also have relatively higher dependence on Ukrainian wheat and would need to source grain from other countries at higher prices. The degree of concern for their ability to do this depends on a complex set of factors beyond the level of dependence on Ukrainian grain, overall import dependence, and overall financial status, including: the structure of importation supply chains including the number and nimbleness of major traders (many of whom are private companies), the country’s geographic location including proximity to alternative source markets, the amount of staple food commodities grown domestically, the strength of national institutions and ability of the government to respond with appropriate trade and social safety net policies, the degree of international and regional cooperation in response, and more. 

Given Ukraine’s bumper harvest in 2021, many poor rural households likely have above-average levels of food stocks and/or financial resources. This is likely to provide some ability to cope with temporary disruptions to income-earning. However, resources among poor and smallholder households in rural areas east of the Dnipro River would be stretched thin as time goes on in the cold winter and lean months, with Stressed (IPC Phase 2)² outcomes likely to persist until food from the next harvest becomes available around June/July. During this time, worst-affected rural households without sufficient resources would likely experience Crisis (IPC Phase 3) outcomes in the short term as stocks are exhausted during the winter months and amidst significant disruptions to livelihoods.

^{[2] The IPC is a five-phase scale, which is comparable across countries and time. The phases range from None/Minimal (IPC Phase 1) to Catastrophe/Famine (IPC Phase 5). When a household is in Crisis (IPC Phase 3) or worse, they are in need of urgent humanitarian food assistance. See description of IPC framework for classifying acute food insecurity here.} 

Highly populated urban areas would be devastated by the direct impacts of active conflict. Civilian casualties, high levels of displacement, and significant disruptions to livelihoods, income-earning, and markets would be likely. As soon as any invasion begins—or as the threat of invasion becomes more imminent—urban households who can afford to do so would likely stockpile food, driving up prices.³ Poor households who cannot afford to stockpile food would likely face consumption gaps and Crisis (IPC Phase 3) outcomes during any periods of time where active conflict prevents households from accessing markets for several days or more.

^{[3] According to BBC news reports, this is likely occurring as of mid-February 2022.}

Though significant uncertainty exists, an estimated 2.5-4.99 million people (around 5 to 10 percent of the national population)—mostly displaced households—would likely need humanitarian assistance in the event of an invasion of this scale. In both rural and urban areas, should food supply be cut off for prolonged periods, Emergency (IPC Phase 4) outcomes are possible and would last until supply is restored. 

The impacts of conflict on livelihoods and business activity—including via disruptions to international exports—would be highly detrimental to Ukraine’s economy, even in the long term. Russia’s long-term objective could be to render Ukraine an economically inviable state. For millions of people, livelihoods would be damaged and unemployment would increase. 

While the importance of the Donbas region as a supplier of agricultural commodities to the rest of Ukraine and to the global export market has diminished since the onset of conflict in 2014, the importance of agricultural production in the region in supplying local populations has increased. It is likely that territory east of the Dnipro River would experience similar shifts. Though increased local supply due to reduced exports would likely increase availability of food for farmers’ own consumption and put downward pressure on prices of locally produced commodities, rising production costs are likely to place opposing upward pressure on prices of locally produced commodities. Prices of imported goods would also likely increase. Overall, reductions in income-earning could outweigh any benefits of increased availability of food for own consumption. Additionally, in the near term, local agricultural production would also be threatened.

Though not part of the scenario analyzed, it is possible that Russia would additionally engage in a full-scale naval blockade of the Black Sea, where it has been pursuing increased control over the years. Should this occur, both domestic and international impacts resulting from reduced exports would be significantly exacerbated.