Russia's invasion of Ukraine, which is the "granary of Europe" will result in a new, hard blow to the food supply chain and an unavoidable price hike, the Smarter consulting company said on Friday.

Smarter noted that the mere announcement of war in Ukraine at the beginning of the year had already had an impact with a price increase of agricultural products such as wheat and corn. The price of wheat for instance which is traded on the Chicago Stock Exchange, has jumped by about 12 percent since the beginning of the year while the price of corn has increased by 14.5%.

Prices continued to increase this week at very high rates and the price of corn increased by three percent in the following month and for wheat by as much as six percent.

“Due to the enormous insecurity in the days to come new disruptions and price rises on world commodity markets can be expected which will be an additional blow to the sowing season in Croatia and on the global food market,” Smarter’s analysis says.

The analysts added that the war in Ukraine has come at a time when the price of food has increased to its highest level in the past ten years seeing that supply channels have not yet recovered from the Covid crisis. Furthermore, climate change is having a growing impact on harvests in the main agricultural production basins while consumption on the Chinese market and around the world is continuing to increase.

“The current trends are a warning of new tectonic disruptions on the global food market and Croatia needs to realistically perceive the latest developments and make decisions so the impact of those disruptions does not result in a drastic price hike and a negative impact on all agricultural production,” Smarter underscored.

Sowing in Croatia needs to be done at best quality possible

An expert at Smarter, Zvjezdana Blazic, said that Croatian farmers should be able to ensure a quality sowing season despite the latest developments and increased price of fertilisers, seeds and fuel, particularly having in mind the government’s package of measures worth HRK 4.8 million to buffer the blow on living standards.

“The current trends indicate that we can expect yet another year in which the price of cereals and oil plants will increase strongly so any quality investment in production is certainly worthwhile,” underscored Blazic. She added that it would be good for Croatian farmers to be ensured favorable loans for working capital and to be ensured a sufficient supply of artificial fertilizers from the Petrokemiija plant as well as protective substances to contribute to a quality sowing season, hence good harvests.

She recalled that Croatia’s cereal and oil plant production is more than self-sufficient while the focus should be on better storage of raw materials that can gain in price and on efforts conducive to ensuring food sovereignty.