(Translated)food chains crisis

August 4, 2022

Will the Ukraine war lead to a catastrophic global food crisis?

Ukraine and Russia together produce about 30% of wheat, 17% of corn, and more than half of the sunflower seed oil exports. Navigational bottlenecks caused by the conflict in the Black Sea ports – where Russian missiles have hit cargo ships – and other complications of the war have hampered Ukrainian exports. The boycotts of shipping companies to Russian ports and the indirect effects of the sanctions have also disrupted the flow of food and feed from Russia, creating problems that could grow, as the Kremlin threatens to impose restrictions on the export of some food commodities.

As bad as the situation looks – one of the major indexes for wheat futures has risen 70% over the past month – it is set to deteriorate further, says The Washington Post. A new report by the United Nations Food and Agriculture Organization (FAO) estimates that food and feed prices could rise 7 to 22% above the levels already high as a result of the war.

The real costs, after adjusting prices for inflation, are close to, but not yet overtaken by, the global economic crisis of 2007 and 2008. Then, droughts, rising biofuel prices and a series of trade protectionist measures combined to produce the worst food inflation since the Soviet grain crisis of the 1970s.

Can the shortage of wheat and grain of Ukraine and Russia be compensated?

In the short term, the FAO says, large agricultural countries – Australia, Argentina, India and the United States – could make up part of the grain shortfall from Ukraine and Russia. However, important factors may worsen the problem.

If the war stops farming in the fertile black Ukrainian soil, the wheat shortage will increase in the coming months. A preliminary FAO estimate is that 20-30% of wheat, corn and sunflower seeds will either not be planted or harvested in Ukraine during the 2022-2023 season due to the war.

Crucially, Russia is also a major exporter of fertilizers, the price of which has already increased. Big disruptions in Russian exports could send prices higher, increasing the cost of food production globally even more.

Countries around the world are accelerating their steps towards trade protectionism
Countries are resorting to trade protectionism to protect their food supplies, a major factor contributing to the sharp deterioration of the 2007-2008 crisis. Since the Russian invasion, Indonesia has imposed new restrictions on palm oil exports to control prices. Hungary banned all grain exports last week, and Serbia said on Wednesday it would ban exports of wheat, corn, flour and cooking oil. Egypt, which depends 80% on Russian and Ukrainian wheat, has imposed export controls on grain, while the price of subsidized bread has already begun to increase.

Kyiv halted exports of meat, rye, oats, buckwheat, sugar, millet and salt, and imposed some restrictions on wheat and corn.

According to Reuters, citing the Russian Interfax agency, Russia may impose a temporary ban on grain exports to a group of former Soviet Union countries, as well as on some exports of sugar.

Grain is a global commodity, and the price of flour, bread and other foodstuffs is set to rise around the world, including the United States. But the countries most affected will likely be those most dependent on Ukrainian and Russian wheat, including Egypt, Turkey, Bangladesh, Indonesia, Eritrea, Kazakhstan, Mongolia, Armenia, Azerbaijan, Georgia, Lebanon and Somalia.

Syria said it would ration wheat, sugar and cooking oil. In Lebanon, the fragile government, with only a month’s supply of wheat left, is supplying ground flour to bread makers as it races to seal new import contracts from other countries including India.

Will the next hunger crisis lead to global unrest?
Experts warn that rising food prices could lead to global unrest. During the 2007-2008 crisis, riots erupted from Haiti to Bangladesh. The social uprisings of the Arab Spring also occurred against the background of a state of popular anger over the high cost of food 12 years ago.

There are signs that food-related disorders will occur again. Al Jazeera English reported that protests erupted in Iraq this week in the poorer regions of the south due to high prices. “Rising prices are stifling us, whether it’s bread or other food products. We can hardly make a living,” retired teacher Hassan Kazem told AFP.

Inflation and supply chain problems stemming from the pandemic period caused food and energy costs to rise even before the Russian invasion, making it more expensive to help other countries in crisis, even as millions around the world plunge into poverty and the threat of hunger increases. David Beasley, executive director of the United Nations World Food Program, wrote in The Washington Post that between 2019 and 2022 the number of people on the brink of famine rose from 27 million to 44 million, with 232 million people further away. One step from entering this classification.

Beasley wrote that the WFP, which provides emergency food aid, is already paying 30% higher prices for food supplies than in 2019, an increase of an additional $50 million per month. He added, “If transport corridors in the Black Sea are further disrupted by this escalating war, transport prices will increase very quickly, up to twice as much.