The global food crisis linked to the Russian-Ukrainian war and the global context disrupted by it no longer appears to be a risk, but an unfolding fact.
The contagion effect of the Ukrainian grain blockade, sanctions on Russian produces, difficulties in fertilizer supplies (which sees Moscow as a semi-monopolist in production) and global distrust is already making its effects felt.
U.S. Treasury Secretary Janet Yellen said, on May 16th, that “Washington had taken note of this threat” which had been feared since the early days of the conflict in Ukraine.
Russia and Ukraine cover a large share of global exports of wheat (35%), barley (25%) and sunflower oil (75%) in addition to producing important shares of corn and canola, vital raw materials for the European food industry, first among world food manufacturers but also for the livelihoods of hundreds of millions of people in developing countries.
The hunger “BOMB” can overwhelm disrupted geopolitical contexts such as sub-Saharan Africa, the Middle East and the Maghreb — all regions with a great contingent of countries that receive more than 30% of their grain from Russia and Ukraine. It can also set in motion uprisings, migratory processes, and systemic challenges that insist on areas such as the Mediterranean, with the risks of increasing disturbances of the staus-quo of the region.
In areas already affected by desertification and climate change, at a time when, as indeed in Ukraine, water and its availability are critical assets, and where severe economic inequalities and issues such as land grabbing persist the specter of food crisis arrives as a serious economic problem.
In other words, as in many other critical phases in history, the food crisis and possible famines may erupt not so much because of a concrete shortage of crops and food but rather because of the combination of the dismantling of traditionally connected value chains on a global scale and the spike in prices.
Rising even before the war, the FAO’s World Price Index touched a new historic high in February’s monthly survey. Records crumbled in March, when the Food Price Index and the Cereal Price Index, its most relevant subset, touched even higher highs that settled near the peak in April.
A significant rise in price was driven by the price of the most strategic of these commodities, wheat.
The precious commodity price rose +79% in the past year, and on February 24th, it ushered in an upward trend that in just a few days led the price per bushel from $706 to $1253, shattering records reached at the time of the 2008 crisis. This is already destabilizing countries such as Lebanon, Tunisia, and Syria which may be the first big losers in the food crisis; and while Ukrainian wheat struggles to find its way abroad and Russian wheat has an uncertain future, countries like India are raising export barriers and it is believed that other states may soon be overwhelmed.
Egypt in the storm
An important case is embodied by Egypt, which depends on 92% on grain supplies from abroad and 70% from Ukraine and Russia. Bread is central to the Egyptian diet, so much so that it is called “aish”, literally “LIFE”.
In 2011 the food price bomb was one of the causes that led Cairo, as well as Tunis, to explode in the Arab Springs.
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And in a country where about a third of the population lives below the poverty line, there is a risk that “when prices go up and the poor cannot feed their families, they will take to the streets” again, as Kristalina Georgieva, managing director of the International Monetary Fund (IMF), warned in April.
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The government of Abdel Fatah al-Sisi had long found itself in the difficult situation of having to manage, as a “social calmer”, an environment characterized by high government subsidies to citizens to buy affordable wheat and bread.
“It is unrealistic for me to sell 20 loaves of bread for the same price as a cigarette,” al-Sisi had said last year.
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Now his prediction about the unsustainability of this system is likely to come true due to price hikes and Egypt’s difficulty in finding alternatives. Wheat from France has in the past been considered too wet for Egypt. Other major exporters such as Australia or Canada bring with them significant additional costs in terms of transportation, especially at a time of high fuel prices.
The average price per imported ton is likely to rise by an average of a hundred dollars for Egyptian citizens.
The tragedy of Africa
In Africa, then, several nations south of the Sahara risk significant beatings. Leaning mainly on Russia but not disdaining Ukrainian supplies either, several states in recent years have promoted campaigns to procure grain from the Sarmatian plains, developing considerable levels of dependence: a report by the United Nations Conference on Trade and Development (UNCTAD) highlighted the overall dependence share on Russian and Ukrainian grain imports of states such as Tanzania (64%), Senegal (66%), the Democratic Republic of Congo (69%) and Sudan (75%).
Data well beyond any form of security.
Seventeen developing nations in Africa and one in Asia, Laos, have dependencies of more than 50% on Russian-Ukrainian supplies, according to the report. These include Rwanda, where the terror of the Malthusian trap and hunger-fueled competition for land and resources unleashed genocidal fury in 1994, and Madagascar, now grappling with its worst drought in half a century. Two states come to total dependence on imports from the two countries: Benin, which imports only from Russia, and Somalia, just under 70% supplied by Ukraine.
The NGO Oxfam pointed out that combining this figure with dependence on vegetable oils and other food resources as many as 250 million more people could go hungry for economic reasons between now and the end of the year and 860 million people worldwide living in absolute poverty, mainly in Africa.
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Oxfam said rising food costs account for 17% of consumer spending in rich countries, but up to 40% in sub-Saharan Africa. The impact will also be felt in wealthier economies, including the United States, where the poorest fifth of households spends 27% of their income on food, compared with only 7% for the richest fifth.
Other “hot spots”
From the “forgotten” war affecting Yemen, the Taliban return to power in Afghanistan, Palestine, and “bread riots” in Iraq, the Greater Middle East already presented various scenarios of food insecurity.
The current disruptive macro events have put immense pressure on a key component of the whole food production chain: fertilizers. These essential pieces of the puzzle are experiencing severe shortages, undermining the ability of other major exporting countries such as Brazil to increase production, but also Bangladesh, Pakistan, and Indonesia as food shortages from Ukraine and Russia can pay substantial duty, albeit less than African countries and Laos.
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It is known that about one-tenth of the world’s population is undernourished and about three billion people do not have access to healthy diets: with this dramatic reality in mind, all regions of the world are rethinking their agri-food systems with the rise in the trend of protectionism. Albeit it may be seen as a mistake, the very idea of absolute globalization of the global food market for the future may also distort.
Countries in crisis are those that have had the least opportunity to diversify sources, as is the case with European countries swept up in the energy crisis.
An alternative arrangement could be described as “selective re-globalization”, divided by large geographic areas, aimed at making trade — and resource use — more efficient according to local characteristics.
This is also to strengthen the food autonomy of areas such as Europe and interconnection with key markets in the near abroad area. It will be hard to arrive at a clear arrangement quickly. Energy can be managed through stocks and rationing, food, especially bread, is needed instantly, and its shortage is felt in the poorest and most unstable countries. After the pandemic, the energy bomb, the Russian-Ukrainian war and galloping inflation, the food crisis stands as the fifth global shock in the past two years…
…and it will make its effects felt in the coming months as all its consequences — from trade terms to potential social and migratory impacts — must be anticipated… before society as we know it, start to crumble.
End of Part 2
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- link to Part 1 of the article series:
- UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT report March 16th, 2022:
- UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT — focus on Africa: