(CN) — Russia’s invasion of Ukraine continues to wreak havoc on agricultural markets across the European Union and around the world, according to data released by Eurostat on Friday.
As Russia rolled tanks over the Ukraine border this past February, the average price of agricultural goods and services increased nearly 10%, driven by a 9% hike in fertilizer costs, a 17% increase in energy and lubricants, and 9% rise in animal feed.
“The Russian invasion of Ukraine has significantly disturbed global agricultural markets, particularly as Russia and Ukraine have been major exporters of grains, wheat, maize, oil seeds, particularly sunflower, and fertilizers,” the Eurostat report said. “This has added further instability to markets, resulting in sharp price rises for key agricultural products and inputs.”
The war makes it challenging to continue production and export of grains, oil seeds, fertilizer and other agricultural goods the EU relies on from Ukraine and Russia, as well as industrial metals and neon gas, used in the production of semiconductors.
In all, agricultural goods prices rose 6% during the first quarter of 2022. After remaining steady for five years, and through the pandemic, prices rose throughout 2021 then increased sharply during the beginning of this year.
Between 2021 and 2022, the cost of agricultural goods rose by nearly 20%, driven by a 42% increase for cereal and a 52% hike in oilseeds. Cattle, poultry and milk prices all increased more than 20% compared to the year prior.
Lithuania, Romania and the Netherlands reported the highest increases in costs of agricultural output, while Greece, Slovakia and Croatia reported price decreases during the first quarter. Eurostat attributes Croatia’s 6% decrease to a drop in the price of forage plants.
The Food and Agriculture Organization of the United Nations also tracked rises in the international food price index, following international changes in the price of a basket of food. While the U.N. reported overall food prices decreasing slightly in April and May, they remained 23% higher than 2021.
Prices for cereal notably increased 2% between April and May, and by 30% compared to the previous year, driven by India's export ban and war torn Ukraine's "reduced production prospects."
"Meanwhile, world price quotations for sunflower oil fell from recent record highs, with stocks continuing to accumulate in Ukraine owing to logistical bottlenecks," the report said in describing a drop in vegetable oil prices.
In addition to shaping the agricultural market, the EU attributes rising inflation to the Russia-Ukraine War, marking a new 30-year high for the euro area on Friday of 8.6%, per Eurostat.
In his spring report, EU economic commissioner Paolo Gentiloni optimistically anticipated inflation hitting 7.5% before falling, with the war creating an uncertain future.
While energy remains the highest contributor to inflation, with a 42% increase in June, the 9% rise in costs of food, alcohol and tobacco is also affecting EU consumers and shows no sign of slowing down.
Energy only makes up about 10% of household spending, with about 40% going to services and 20% to the food, alcohol and tobacco sector.
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