Conflict in Ukraine Could Double Finland's Food Prices, Economy Minister Warns

The West's crippling sanctions against Moscow over Russia's special operation in Ukraine may severely undermine exports of grain and key fertilisers, resulting in shortages and price hikes; Russia and Belarus are two of the top producers of fertilizer.

Finns must brace themselves for “wartime pricing”, as the conflict in Ukraine may see food prices nearly double, Economy Minister Mika Lintilä has warned.

In an interview with national broadcaster Yle, Lintilä cited towering knock-on effects from steep increases in fuel and fertiliser prices.

“The price of food will rise. If 11 percent of people's income now goes to food, more than 20 percent will”, Lintilä predicted.

Lintilä called the agricultural situation “already critical” and called for a support package to ensure food security.

Finland's agricultural sector is – like most of Europe and beyond – reliant on Russian and Belarusian fertilisers, whose imports have been disrupted as a result of restrictions imposed over Russia's special operation in Ukraine, which the West portrays as “Russian invasion” and attempts to stop with towering sanctions. This, in turn, may lead to a spike in the costs of agricultural products, particularly meat, experts have warned.

Prior to the conflict, about a third of Finland's nitrogen fertiliser and up to 60 percent of the potassium fertiliser used to come from Russia and Belarus. The spike in prices associated with the shortage could lead to a reduction in meat consumption, Jyrki Niemi, professor of agricultural policy at the Natural Resources Centre, told Yle, suggesting that it would be positive news for the sustainability of food production.

“If the rise in the costs of fertilisers and feed is passed on to consumer prices, it will also curb the consumption of meat. Especially in prosperous countries that can afford to reduce meat consumption”, Niemi noted.

Last week, the Bank of Finland downgraded its forecast for the Finnish economy due to the conflict in Ukraine, where Russia is currently waging a special operation aimed to demilitarise and de-Nazify the country and protect the People's Republics of Donbass. The West replied with obliterating sanctions covering all spheres of life ranging from banking, tech and finance to consumer goods, with dozens of companies leaving Russia in protest as well as over logistics issues.

Lintilä said that the Finnish state doesn't plan to offer any exceptional subsidies to Finnish companies that have suffered losses by pulling out of the Russian market, including food giants like Valio, Hesburger, Fazer and Paulig. He emphasised that Russia has been known to be a country with high risks and expectations of high returns.

Since both Russia and Ukraine are agricultural powerhouses, prospects of having Russian grain exports severed by Western sanctions, coupled with concerns of global shipment disruptions, have already led to a global spike in wheat prices.

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