Global food prices to escalate
..a long-standing issue will be exacerbated and require multiple responses
Just over 6 months into the global pandemic, the UN World Food Programme was awarded the Nobel Peace Prize. The organization raised the alarm bells of growing hunger (even in communities doing well the year prior to the pandemic) and continues to work assiduously to prevent hunger to be used as a weapon of war. When they received the award, the organization reported conflict is the largest driver of global hunger, accounting for 60% of those who hunger in the world today. As of 2021, the UN World Food Programme’s research showed almost 1 billion people went hungry. With the ongoing conflict in Ukraine and Western sanctions battering Russia’s economy, that number will surely rise across the developing world and elsewhere.
With gas prices continuing to climb, supply chains still undergoing repairs and the pandemic only now just starting to recede into our rearview mirror, key food sources are in peril. Russia and Ukraine produce roughly 30% of all wheat in world, almost 20% of global corn and 80% of all sunflower oil. In February, wheat prices were up 70%. If the UN Food agency projections are correct, global food and feed prices can increase another 20% due to the ongoing conflict in Ukraine. If and when that happens, nations such as Egypt, Nigeria, Cameroon and Yemen will be among the first nations to witness significant malnutrition and starvation at home. Egypt, in particular, imports half of its wheat and must be extremely concerned as analysts believe Egypt imported 80% from Russia and Ukraine.
Over the years, Ukraine has become the UN World Food Programme’s largest supplier of food, providing Lebanon with more than half of its wheat, Tunisia with more than 40% of its wheat and contributing to roughly a quarter of Yemen’s wheat. To get an understanding of what is happening on the ground in Ukraine, Reuters spoke to a local farmer, Oleksandr Chumak, who states not much work is happening on his fields where he grows wheat, corn and sunflowers. Fuel and fertilizer inhibit production which Chumak predicts will reduce yields by at least fifty percent. If that bears true, what food is produced may be used nationally with massive export reductions (understandably so given the severity of the conflict). Currently, as the conflict rages in Ukraine, no ships are leaving.
To add insult to injury, Russia produces 13% of all global fertilizers; as supply shrinks, demand will increase fertilizer prices which will hurt food production, which in turn will impact food prices even more.
According to Reuters, “agriculture ministers from the world's seven largest advanced economies were due Friday to discuss in a virtual meeting the impact of Russia's invasion on global food security and how best to stabilize food markets.”
In America, household budgets are already stretched thin with total cost of expenditures for gas, food, healthcare, education and housing rising. The administration’s Build Back Better plan was intended to address several of these rising costs but was defeated again and again in the Senate. Now the current concern is that high fertilizer costs will inhibit food production nationally and globally and will impact how much food can and should be exported to nations in dire need.
In earlier eras, including as recently as President Obama’s administration, food insecurity led to civil unrest and political turmoil. Though initial reports at the time called the Arab Spring in Egypt the ‘twitter revolution,’ experts pointed to bread shortages being a primary catalyst.
In 2013, the Organisation for Economic Co-operation and Development (OECD), stated there was enough food to feed the world but poverty and market disparity were to blame. Production and distribution were and continue to be inequitable. In that same year, the Guardian pointed out:
The Doha development round of trade talks is all but dead, and only two issues have survived to merit serious consideration at Bali. One is "trade facilitation" – the harmonising and standardising of customs rules and procedures that is an agenda of the global north to ease import practices across the world. There are the usual noises being made about how this will dramatically increase both trade and employment worldwide, on the basis of spurious empirical exercises.
The other issue is more central: the focus on agricultural subsidies, which affects the livelihoods and food security of more than half the world's population. Unfortunately, some wealthy countries have demanded acceptance of the former while refusing to make even the most obvious adjustments to meet the latter.
All of this paints a dire picture with a hint at what is possible to address this problem in the short-, medium- and long-term. As the 7 largest advanced economies meet to discuss Russia’s impact on global food security, how wealthier nations increase domestic food production, expand and extend governmental food programs (e.g. SNAP) and continue global food exports will determine if the impending calamity can be at least be mitigated. An idea proffered by the New Scientist to spur domestic food growth - transition biofuel production to grain production. They point out that 10% of all grain in the world is converted to biofuel. In the U.S., roughly a third of all corn is converted into fuel, producing nearly 90 million tons of ethanol. However, if the corn remained corn, that would easily supplant the corn exports from Ukraine and Russia. In the EU, 12 million tons of wheat and corn are converted to ethanol. Obviously with growing energy concerns, this type of solution requires serious planning, but it presents a temporary solution that is within reach.
In the medium-term, Western governments, with a special focus on the USA, need to revisit their agricultural subsidies. Increasing domestic production is a start, but agricultural subsidies are hurting the developing world’s ability to produce and to purchase food themselves. In the long-term, the UN developed 6 recommendations needed to transform food systems. A quick summary below:
1. Integrating humanitarian, development and peacebuilding policies in conflict-affected areas.
2. Scaling up climate resilience across food systems.
3. Strengthening the resilience of the most vulnerable to economic adversity.
4. Intervening along the food supply chains to lower the cost of nutritious foods.
5. Tackling poverty and structural inequalities, ensuring interventions are pro-poor and inclusive.
6. Strengthening food environments and changing consumer behaviour to promote dietary patterns with positive impacts on human health and the environment.
..to learn more about food insecurity: