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Global Food Crisis

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Global Food Crisis

A looming disaster in the wake of Russia’s Ukraine War

The effects of war in Ukraine are already being felt across the world, from rocking world energy markets to spurring a growing refugee crisis in Europe. But the conflict could have more ripple effects, including sparking a global food crisis.

Even before Russia launched a large-scale invasion of Ukraine, the year 2022 was on track to be one of sky-high food prices, food shortages and deep hunger in many parts of the world. Now, there is a massive humanitarian crisis in Ukraine, and the war’s impacts are reverberating around the globe. The Food and Agriculture Organization’s (FAO) latest food price index, which records the price movements of the most commonly traded and consumed food crops, has revealed that food prices have hit a new record high as the index averaged 159.3 points in March, up from the then-record 140.7 points in February. The March index is the highest it has been since the tool was created in the early 1990s. Prices are also 12.6% higher than they were in February, the second-highest month-to-month increase in history, according to FAO economist Josef Schmidhuber.

This has happened because a crucial portion of the world’s wheat, corn and barley is trapped in Russia and Ukraine because of the war, while an even larger portion of the world’s fertilizers is stuck in Russia and Belarus. Resultantly, global food and fertilizer prices are soaring. Although food prices were already rising fast amid supply chain disruptions and pandemic-related inflation, some prices — especially that of wheat — have, however, shot through the roof because of the Ukraine crisis, upending calculations of the world’s available food supply.

The looming disaster is laying bare the consequences of a major war in the modern era of globalization. Prices for food, fertilizer, oil, gas and even metals like aluminum, nickel and palladium are all rising fast — and experts expect worse as the effects cascade.
As alarm bells ring across the world because of the Ukraine crisis, we take a look at how deep the crisis is given its impact on the global food supplies.

How grave is the crisis?
Russia and Ukraine were major exporters of wheat, corn, barley, rye, sunflower seeds and more. They account for nearly 30 percent of wheat, 17 percent of corn and over half of sunflower seed oil exports across the world. With Ukraine under attack and Russia hit with strict sanctions, a huge supply of food is suddenly trapped. The conflict-induced bottlenecks at Black Sea ports — where cargo vessels have been struck by Russian rockets — and other complications of the war have slammed Ukrainian exports. The boycott of Russian ports by shipping companies and the knock-on effects of sanctions have also disrupted the flow of foods and feeds from Russia — creating problems that could grow as the Kremlin now threatens to impose export controls on some food commodities.

A recently published report by the Food and Agriculture Organization (FAO) of the United Nations estimates food and feed prices could surge to up to 22 percent above the already elevated levels due to the war. Now putting that in terms of real-life inflation, costs are approaching the global food crisis of 2007 and 2008, when droughts, the rise of biofuels and a barrage of trade protectionism merged into the worst food inflation since the Soviet grain crisis of the 1970s.

The number of people on the edge of famine had jumped to 44 million from 27 million in 2019, the UN’s World Food Programme recently said. The conflict between Russia and Ukraine, the countries that play crucial roles in the carefully calibrated system of global food production, just stands to make the situation worse. The World Food Program’s costs have already increased by $71 million a month, enough to cut daily rations for 3.8 million people.

Food protectionism
The worst possible response to the food crisis would be for wealthy nations to halt or heavily restrict exports of key crops. It’s tempting in tough times to hold on to all available supplies, but that exacerbates hunger in developing nations. This scenario played out during the Great Recession in 2008 when dozens of countries severely curbed exports of key crops, triggering food riots from Egypt to Haiti. Despite that various nations in a bid to ensure that their citizens are not left hungry or are forced to pay high costs for food are resorting to protectionism. Hungary has banned export of grains, while Moldova, a small exporter, has suspended shipments of wheat, corn and sugar. Argentina is ensuring wheat supply to domestic millers and keep pasta prices under control. Indonesia has increased supply of palm oil by domestic producers to 30 percent from the earlier 20 percent as cooking oil prices have soared. Bulgaria, a large exporter, is working out a system to buy food grains to meet the needs of its citizens. Egypt, too, has banned exports of key agricultural products, including flour, lentils and wheat. Russia itself has been taxing exports for some time now, while Ukraine has barred shipments of wheat, oats and key staples to ensure its citizens do not go without food while fighting the Russian invasion. The protectionism will ensure that food produced for the domestic market is not exported in view of surging global prices.

Countries likely to be impacted the most
Rich nations such as the United States, Australia and much of the European Union will see food prices jump even higher, straining lower-income households that already report they are struggling with inflation. But at least the bread and cereal aisles will still have products on the shelves. In many parts of the developing world, there will be a genuine risk of starvation and famine, because low-income countries do not have enough money to pay high food prices. Fifty countries depend on Russia and Ukraine for more than 30 percent of their wheat, and many are among the poorest nations in North Africa, Asia and the Middle East.

Least developed countries mainly in Africa and Asia are likely to be affected the most. Countries in West Asia will also be affected. The main reason is that countries in Africa and West Asia had been depending on Russian and Ukraine supplies for wheat, corn and cooking oils. Both these nations are also logistically nearer, while the prices of their agricultural commodities are priced competitively.
Egypt, Iran, Turkey and Bangladesh depend on these two nations for 60 percent of their wheat supplies. Lebanon, Tunisia, Yemen, Libya and Pakistan are other nations depending on the erstwhile Soviet Union member nations for their food needs. Besides, Russia is a key supplier of fertilisers. Its war with Ukraine and the sanctions against it threaten to either make fertiliser costly for importing nations, thus raising farm input costs, or altogether stop them.

How to avert the crisis
The potentially disastrous implications of the war in Ukraine for global food security are clear. The equally bleak implications of the latest Intergovernmental Panel on Climate Change report for the resilience of the food system are even starker. Billions of people are on a trajectory towards hunger, poverty and instability, driven by conflict, Covid-19, climate change and rising food costs. The world does not need more dire warnings. The burning question is: what are we going to do? In addition to providing urgent humanitarian support to those in need, the international community can take the following concrete steps to alleviate the food crisis in the short-term and build a more sustainable and resilient global food system for the years ahead.

1. Ensure open flow of trade
We must work to maintain the open flows of trade on which every nation depends for their food supplies. Trade barriers and export restrictions are damaging to all sides, and particularly in times of crisis, as the world learned in early 2020 when nations reacted to the arrival of Covid-19 by hoarding vital medical supplies, undermining global solidarity.

2. Avoid protectionism
The spectre of protectionism is once again on the rise, with states including Hungary, Serbia, Indonesia and Turkey already restricting exports, including of flour and cooking oil. A strong show of unity from leading states can mitigate these short-sighted tendencies. The G7’s call on all nations to keep their food and agricultural markets open sets the right direction and must be held firm; the G20 must follow suit.

3. Increase production in other countries
Even if Ukraine’s farmers are able to sow this season’s crop in the coming weeks, which is uncertain, it is highly likely that the world will still face shortages. We need to increase production appropriately in other regions of the world, sustainably and without delay.

4. Ensure enhanced supply of fertilizers
It is urgent that smallholder farmers, especially in Africa and Asia, can access the fertilizer and infrastructure they need, as well as financial support to withstand turmoil in the market. And across the world, including in China, broader increases in productivity and yields could be achieved by investing in soil health, agricultural innovation and restoring degraded land. All this should be done in ways which protect critical ecosystems, such as forests, wetlands and peatlands.

5. Global cooperation
Countries around the world should work together in good faith to share data and explore when, and in what circumstances, to release food from national stockpiles and granaries. National stockpiles have an often vital role to play in food and nutrition security; they can also be used judiciously at times such as these to reduce food prices and to alleviate humanitarian crisis.

6. Create a sustainable food system
The current crisis must catalyse an urgent transition to a stronger, more sustainable and equitable global food system for the long term. Such a system would dramatically reduce greenhouse gas emissions and biodiversity loss; be much less reliant on fertilizers and pesticides, and render the existing ones much more effective and less environmentally damaging; be more circular and regenerative in approach; waste far less; and be structured around delivering the healthy diets that the world needs. This would include major reductions in meat consumption in affluent nations, and a redirection of food and agricultural subsidies to support the transition.

The conflict caught many off-guard; the food crisis need not. In a spirit of solidarity and collaboration, we can strive to ensure nutritious food for all, even in the face of the current crisis and without pricing out the poorest, by empowering the agricultural communities who feed us and by building a system better equipped to withstand future shocks. The perils of the hour require moral leadership and foresight of the highest order from heads of state, business leaders, and society at large.

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