The repercussion of Russia’s war on Ukraine will impact the global economy severely, especially the countries that have economic interests with it. Ukraine and Russia are exporters of major commodities and raw material, as Russia produces about 10 percent of the world’s wheat, and Ukraine 4 percent. Lebanon, which is already struggling from a stifling economic crisis that is driving people deeper into poverty, will not be immune from this crisis.
Bread crisis on the horizon
In 2020, Lebanon imported about 93,000 tons of wheat from Russia and 512,000 tons from Ukraine, which represents 15 percent and 81 percent respectively, of the total wheat imports to Lebanon, according to Lebanese Customs. These figures confirm that Lebanon is facing a potential bread crisis if the war is prolonged, but Ministry of Economy and Trade indicated that stocks of wheat in Lebanon are enough for a month and a half maximum.
The crisis is not limited to wheat, as Lebanon imports other commodities including grains and oil from Russia and Ukraine. Imports from Russia to Lebanon represented around 15 percent of total value of imports to Lebanon in 2020, while imports from Ukraine represented 8 percent.
Limited stock of sunflower oil
Lebanon also imports about 100,000 tons of edible oil annually, of which 90,000 tons are sunflower oil. About 50 percent of the edible oi are imported from Ukraine, 30 percent from Russia, 15 percent from Turkey, and 5 percent from Egypt, but both Egypt and Turkey import crude oil from Ukraine and Russia as well, according to the Head of the Syndicate of Food Importers in Lebanon, Hani Bohsali.
Bohsali told Sawt Beirut International (SBI) that the stock of sunflower oil in the market is sufficient for about a month and a half. He considered that an “oil crisis” is looming on the horizon, especially as the Holy month of Ramadan and Easter is approaching. However, he pointed out that what will happen is related to the conflict in Ukraine and its duration.
He added: “Supply chains from the two countries have been halted so far, but the economic activity can resume immediately once ceasefire announced.” Bohsali stressed that exporters from Ukraine have notified the Lebanese merchants that they are unable to secure goods due to the “force majeure.” However, he pointed out that there are other market alternatives for the two countries for imports such as lentils, corn, almonds, and others.
Consumers sparked fears of the merchant’s monopoly and the rise in prices, and as usual rallied to stores and supermarkets to purchase foodstuffs. However, Bohsali indicated that supply and demand will control prices in the market.
The war in Ukraine affected the supply chain and global oil prices, as the price of a barrel surpassed $100 threshold, which would be reflected an increase in the prices of consumer goods in the Lebanese market.
The Ministry of Economy is intensifying its efforts to draw up an action plan for the coming months that would protect Lebanon from a possible food crisis if the conflict extended and widened. Minister Salam held a meeting with the US Ambassador, Dorothy Shea, and with a delegation from the US Treasury, who assured that they will support Lebanon by granting it grains.
Bohsali ruled out the ability of the local industry to contribute to a partial solution, as food factories import raw materials from Ukraine and Russia. He pointed out that resorting to alternative markets may be a difficult task, as the prices of products in those markets rise due to the ongoing war, and traders may not take the risk, while the course of the Ukrainian war may change the equation overnight. It also takes several months for shipments to reach the local market.
The conflict between Russia and the West adds an additional economic burden on Lebanese who are immersed in several crises, and fighting every day a war of survival.