When the Ukrainian invasion began in February, Moscow imposed a blockade on the Black Sea ports, which halted all agricultural exports.
The United Nations and Turkey put an agreement on the table establishing a protected sea corridor signed by both Ukraine and Russia in July 2022.
Valid for 120 days, the agreement that allows grain shipments from Ukrainian ports is up for renewal on 19 November 2022. This should be done automatically, but Russian President Vladimir Putin warned about the future of the agreement, saying that most of the grain is directed to Europe and not to “the poorest developing countries.”
“It is believed that Putin will use the deal's extension as leverage in the G20 summit in Indonesia on 15 and 16 November 2022. He is concerned about Russian grain and fertilizer exports too,” explained Megan Hesketh, Senior Analyst at UK’s Agriculture and Horticulture Development Board (AHDB).
According to experts consulted by GlobalPETS, Ukraine's grain exports are already close to pre-war levels since the beginning of October 2022. But the risk of an imminent new disruption sends a red signal to the global food chain, including the pet industry.
Maintaining production lines
Ukraine and Russia are major grain exporters, accounting for around 25% to 30% of the world’s wheat exports. Companies across Europe, Africa, and Asia depend on the availability of these raw materials to maintain their production lines.
The European Pet Food Federation (FEDIAF) warns that the situation in the Black Sea is “increasingly challenging.”
Exploring new markets
FEDIAF highlights that ingredients often cannot be replaced in a product as pet food formulations need to follow legal requirements for a healthy and balanced diet for the pets.
“To ensure continued food supply, pet food manufacturers have been taking appropriate measures to adjust their sourcing practices, occasionally embracing increased prices of raw materials in a low supply environment,” added a spokesperson from the Brussels-based trade association.
As many companies cannot modify their formulas, some are trying to find the availability of primary products in alternative markets, such as South America.
A good example is Argentina, the third-largest wheat exporter in the Americas after the United States and Canada, which is trying to supply the wheat deficit in Western markets.
“New companies came to South America in search of grains that were lacking in the European market, but they had to adapt to a higher reality in prices,” explains market analyst Carlos Cogo from the Brazilian city of Porto Alegre.
