The impact of the Russia-Ukraine war on the Pet Food Industry
Since the conflict between Russia and Ukraine began, the problem of the availability of raw materials has not stopped growing. Its price increase and supply uncertainty inevitably mean that both human and pet food companies must start looking for alternatives to their standard processes.
War in Ukraine threatens world food supply
Russia is one of the world's largest wheat exporters; Ukraine follows in its footsteps. Both countries, from 2021-to 2022, were expected to account for almost 30% of global wheat exports, according to data from the US Department of Agriculture, a number that is affected by unexpected events.
The Russian tanks and missiles that besieged Ukraine have since threatened the food supply and livelihoods of scores of people in Europe, Africa, and Asia who depend on the farmland of the Black Sea region, known as the "breadbasket" of the world." As in war zones, Ukrainian farmers had to abandon their fields as millions fled, fought, or tried to stay alive. And just as the ports that ship wheat and other staples around the world are being closed in Ukraine, in Russia there is a huge concern that its grain exports will be increasingly affected by Western sanctions.
A long conflict would undoubtedly have a major impact
There is a reality: wars mean scarcity, and that means price increases. If the Ukrainian citizens have been called to defend their country, who does the harvesting? Who takes care of the transportation?
If we consider that during the first two days of the conflict, the price of cereals for animal feed increased by 10% on the open market in Spain, what can we estimate for what's left of 2022 if shortages and supply problems continue to increase?
How can we expect, then, that the raw materials industry does not affect the pet food industry, which has a constant interrelation?
Pet Food companies respond to the Russian invasion
The Russian invasion of Ukraine has prompted scores of pet food and treat manufacturing companies to refocus their operations in their respective regions. Regarding the conflict specifically, several companies have decided to either stop their operations or advertisements in Russia as a sanction to the country or to make money and food donations for people and pets seeking refuge in other European countries as well as in Ukraine to resist Russian forces.
Ukraine and Russia are major food producers. Both countries combine almost a third of world exports of wheat and barley. Ukraine is also a major corn supplier and a world leader in sunflower oil, widely used in food processing. And is, in fact, the fourth largest external food supplier in the entire EU. Russia, for its part, is the world's leading exporter of nitrogenous fertilizers and the second leading supplier of potassium and phosphorous fertilizers.
Logically, the global pet food industry may impact some of the main commodities that Ukraine produces; any disruption to its supply could have ripple effects throughout the global ingredients market.
This is insignificant in comparison with the loss of lives and livelihoods in Ukraine, but pet food manufacturers around the world must contend with ever-increasing disruptions to already tangled enough supply chains.
As a result of the conflict, we can name the ships that cannot leave the Black Sea ports, and therefore all exports are stopped. Furthermore, international sanctions on many Russian companies are already having an impact.
In this sense, there is no doubt that pet food companies are already (and must continue) actively searching not only for alternative suppliers for raw materials that they do not obtain as before but also for substitutes. Operations cannot be stopped but rather modified, so that, in the event of a total lack of supply, the different food formulas should be changed with the main objective of keeping on supplying the pet food industry and pet owners who are in constant demand for food.
However, although pet food manufacturers use different raw materials and supply chains, the repercussions for the pet food industry are inevitable. The limited availability of some essential raw materials, such as sunflower oil or white fish, packaging raw materials and cereals, as well as the interruption of logistics and fertilizer and fuel reservation are just some of the factors of the problem.
We should also consider that the impact of Russia's actions against Ukraine goes far beyond the grain and energy markets: there is the potential (which is already happening in many parts of Europe) to increase global inflation, yet increased as a result of COVID-19. And although Russia and Ukraine are not economic giants like the United States and China, they are important suppliers of certain diary products.
And while the pet food industry has already successfully overcome the challenges of the pandemic by adapting supply chains and sourcing alternative raw materials, we are once again facing an uncertain present and future.
Any change in raw materials can affect supply chains and availability.