An Update On The Ukrainian Conflict From IGA CEO John Ross

Mar 2, 2022

As the Russian invasion of Ukraine unfolds, many of you have been asking me what the implication might be for the U.S. overall, and the grocery industry in particular. As a global retailer, with wholesalers and retailers who service Poland, Eastern Europe, and Russia, I thought the following points might be relevant:

1. Both Russian and Eastern European/Polish retail and wholesale owners are extremely worried about these events.

In a world where supply currently does not meet demand, any disruption to the already stressed supply chain is dangerous. They believe the conflict in Ukraine will have substantial impact on the European continent’s food supply, as well as export partners all over the world.

2. The Ukrainian agriculture industry is one of the largest in the world. 

Ukrainian wheat keeps European, Russian, and Chinese populations fed. Any disruption to these critical crops would have disastrous implications. The wheat crop is in the ground and so far, has not been significantly impacted by the armed conflict. Even if the crops are able to be harvested, transportation and shipping are currently frozen. If that crop is trapped in Ukraine, thousands of people could be nutritionally compromised in countries that have not considered starvation effects since the end of the second world war.

3. Thus, there is a massive economic incentive to resolve this conflict quickly.

It is likely that, from Russia’s point of view, a war that extends into key planting and growing seasons would both spike food prices at home and create social unrest across the region. Their policy must be to win fast or resolve the conflict quickly.

4. If the conflict goes on for more than a few weeks, food-producing nations worldwide will benefit.

There are huge opportunities for American farmers and protein suppliers. Long-term conflict here could lower the U.S trade deficit as there are few food-producing nations with both the capacity and the available fallow fields who could close the gap with Ukrainian exports.

5. Beyond commodity food production, pay attention to mid-range impacts on raw materials supplies.

Ukrainian commodity exports include a large percentage of the globe’s raw materials used in manufacturing and the CPG industry (for example, manganese used in aluminum production). Again, any conflict that drags on long enough to prevent the harvesting of these materials or transportation into the export market would exaggerate inflation effects in everything from car batteries to canned food.

6. For years, we have seen the Russian government direct or protect cybercriminals.

In the U.S. alone, they have created a multi-billion dollar annual revenue stream that rivals any organized crime syndicate. Russia has also used cyber attacks as methods to destabilize both economic and operational systems (everything from utilities to traffic light controls). This includes centers of government, military and political organizations, and more.

Whatever we have seen in the past few years (including interference in gas pipeline systems last year and the previous presidential election), should be considered as reconnaissance missions—small strikes, without a focused plan of attack, managed by multiple private and government cybercriminal groups. As successful as they appear to have been, we haven’t seen a full scale attack until now. The full impact of the Russian cyber invasion on Ukrainian infrastructure is not yet known, but so far it appears the attacks have centered on government and military more than businesses.

7. In the history of global politics, sovereign nations have used economic sanctions as alternatives to armed conflict.

Cyber warfare gives a new tool to aggressor nations who now have a new retaliatory tool to respond to strike back against economic sanctions. If the conflict is not resolved quickly, we could see coordinated economic attacks on NATO and U.S. infrastructure—and private business. In fact, I would expect to see these.

8. The strongest action U.S. businesses can take now is to harden their systems against cyberattacks.

There are dozens of companies who provide consulting and cyberthreat protection services. The Independent Grocers Alliance's partner is Millennium Digital Technologies. Please, engage with a partner now. Today. And ask your business associates in the local chamber of commerce, rotary clubs, etc. to do the same. When economic sanctions start hurting the Russian economy, expect them to attack back. And destabilizing both large and small businesses will likely be a primary aim of these attacks.

You May Also Like

These Stories on From the Desk of

Subscribe by Email

No Comments Yet

Let us know what you think