'Russia-Ukraine War-induced' Surge in Grain Prices, Direct Impact on Food Shortages in Middle East and North Africa

[Asia Economy Reporter Donghoon Jeong] The surge in grain prices caused by the war between Russia and Ukraine is beginning to have a significant impact on developing countries in the Middle East and North Africa.

The Egyptian government, with a population of 103 million, froze the price of non-subsidized regular bread at 11.5 Egyptian pounds (about 770 KRW) per kilogram on the 21st (local time). The price of bread sold without subsidies rose sharply by 25%, from 1 pound per kilogram before the war to 1.25 pounds in just three weeks. According to the Cairo Chamber of Commerce, flour prices increased by 15% during the same period.

The Egyptian Prime Minister's Office warned that if the bread price ceiling is not observed and prices are raised arbitrarily, fines ranging from a minimum of 100,000 pounds (about 6.7 million KRW) to a maximum of 5 million pounds (about 3.3 billion KRW) could be imposed. Egypt is one of the world's largest wheat importers, relying on imports for about 60% of its total consumption. In particular, Egypt depends on Russia and Ukraine for about 80% of its imported wheat, making it heavily affected by the war.

Notably, the Egyptian government has been providing 'Baladi bread' at a low price of 0.05 pounds (about 3.35 KRW) to 70% of the population for 45 years through subsidies, but the surge in grain prices is expected to cause bread subsidy costs to balloon.

The Lebanese government, unable to cope with the surge in grain prices, is seeking help from the international community. Lebanese President Michel Aoun appealed, "The grain warehouses were all destroyed by the Beirut explosion in 2020, and due to the impact of the Ukraine war, it has become even more difficult to purchase wheat, making it impossible to secure sufficient quantities," urging that "the UN must increase food aid."

In fact, since the Russian invasion of Ukraine, flour has disappeared from Lebanese stores since early this month, and bread prices have risen by about 70%. The World Bank (WB), in its Trade Watch report released that day, pointed out that developing countries in the Middle East and North Africa such as Lebanon, Libya, Tunisia, as well as Gambia, Moldova, Djibouti, and Pakistan, which are highly dependent on Ukrainian wheat, are facing short-term supply shortages.