by QU Dongyu, Director-General of the Food and Agriculture Organization of the United Nations
Over the past two years, COVID-19 has presented many challenges to global food security. Today, what is happening in Russia and Ukraine adds another significant challenge. Russia and Ukraine play a substantial role in the global food production and supply. Russia is the world’s largest exporter of wheat, and Ukraine is the fifth largest. Together, they provide 19% of the world’s barley supply, 14% of wheat, and 4% of maize, making up more than one-third of global cereal exports. They are also lead suppliers of rapeseed and account for 52% of the world’s sunflower oil export market. The global fertilizer supply is also highly concentrated, with Russia as the lead producer.
Supply chain and logistical disruptions on Ukrainian and Russian grain and oilseed production and restrictions on Russia’s exports will have significant food security repercussions. This is especially true for some fifty countries that depend on Russia and Ukraine for 30% or more of their wheat supply. Many of them are least developed countries or low-income, food-deficit countries in Northern Africa, Asia and the Near East. Many European and Central Asian countries rely on Russia for over 50% of their fertilizer supply, and shortages there could extend to next year.
Food prices, already on the rise since the second half of 2020, reached an all-time high in February 2022 due to high demand, input and transportation costs, and port disruptions. Global prices of wheat and barley, for example, rose 31% over the course of 2021. Rapeseed oil and sunflower oil prices rose more than 60%. High demand and volatile natural gas prices have also driven up fertilizer costs. For instance, the price of urea, a key nitrogen fertilizer, has increased more than threefold in the past 12 months.
The conflict’s intensity and duration remain uncertain. The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally, when international food and input prices are already high and volatile. The conflict could also constrain agricultural production and purchasing power in Ukraine, leading to increased food insecurity locally.
Core Risk Factors Identified
Cereal crops will be ready for harvest in June. Whether farmers in Ukraine would be able to harvest them and deliver to the market is unclear. Massive population displacement has reduced the number of agricultural laborers and workers. Accessing agricultural fields would be difficult. Rearing livestock and poultry and producing fruits and vegetables would be constrained as well.
The Ukrainian ports on the Black Sea have shuttered. Even if inland transportation infrastructure remains intact, shipping grain by rail would be impossible because of a lack of an operational railway system. Vessels can still transit through the Turkish Straits, a critical trade juncture through which a large amount of wheat and maize shipments pass. Rising insurance premiums for the Black Sea region would exacerbate the already high costs of shipping, compounding the costs of food imports. And, whether storage and processing facilities would remain intact and staffed is also still unclear.
The Russian ports on the Black Sea are open for now, and no major disruption to agricultural production is expected in the short term. However, the financial sanctions against Russia have caused an important depreciation which, if continued, could undermine productivity and growth and ultimately further elevate agricultural production costs.
Russia is a major player in the global energy market, accounting for 18% of global coal exports, 11% of oil, and 10% of gas. Agriculture requires energy through fuel, gas, electricity use, as well as fertilizers, pesticides, and lubricants. Manufacturing feed ingredients and feedstuffs also require energy. The current conflict has caused energy prices to surge, with negative consequences on the agriculture sector.
Wheat is a staple food for over 35% of the world’s population, and the current conflict could result in a sudden and steep reduction in wheat exports from both Russia and Ukraine. It is still unclear whether other exporters would be able to fill this gap. Wheat inventories are already running low in Canada, and exports from the United States, Argentina and other countries are likely to be limited as government will try to ensure domestic supply.
Countries reliant on wheat imports are likely to ramp up levels, adding further pressure on global supplies. Egypt, Turkey, Bangladesh, and Iran are the top global wheat importers, buying more than 60% of their wheat from Russia and Ukraine, and all of them have outstanding imports. Lebanon, Tunisia, Yemen, Libya, and Pakistan also rely heavily on the two countries for their wheat supply. Global maize trade is likely to shrink due to expectations that the export loss from Ukraine will not be filled by other exporters and because of high prices.
Export prospects for sunflower oil and other alternative oils also remain uncertain. Major sunflower oil importers, including India, the European Union, China, Iran, and Turkey, must find other suppliers or other vegetable oils, which could have a spill-over effect on palm, soy, and rapeseed oils, for example.
Policy Recommendations
1. Keep global food and fertilizer trade open. Every effort should be made to protect the production and marketing activities needed to meet domestic and global demands. Supply chains should keep moving, which means protecting standing crops, livestock, food processing infrastructure, and all logistical systems.
2. Find new and more diverse food suppliers. Countries dependent on food imports from Russia and Ukraine should look for alternative suppliers to absorb the shock. They should also rely on existing food stocks and diversify their domestic production to ensure people’s access to healthy diets.
3. Support vulnerable groups, including internally displaced people. Governments must expand social safety nets to protect vulnerable people. In Ukraine, international organizations must step in to help reach people in need. Across the globe, many more people would be pushed into poverty and hunger because of the conflict, and we must provide timely and well-targeted social protection programs to them.
4. Avoid ad hoc policy reactions. Before enacting any measures to secure food supply, governments must consider their potential effects on international markets. Reductions in import tariffs or the use of export restrictions could help to resolve individual country food security challenges in the short term, but they would drive up prices on global markets.
5. Strengthen market transparency and dialogue. More transparency and information on global market conditions can help governments and investors make informed decisions when agricultural commodity markets are volatile. Initiatives like the G-20’s Agricultural Market Information System (AMIS) increases such transparency by providing objective and timely market assessments.
*Given the terrible events in Ukraine I thought it important to share this opinion piece from FAO’s DG issued by FAO today.
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Earthlings – Grow Up or Die Out
I wondered what a benign long-lived alien race observing Earth for millennia would make of what is happening to us on Earth today. Perhaps it might go something like this.
An open letter to all of humanity
In a lot of your fiction and movies you portray alien threats to the future of planet Earth as the catalyst that forces all nations to come together to fight that threat. We’ve been watching you for a very long time. We are not the threat but you are the threat to yourselves. We think of you all as Earthlings. You’re clearly a very clever and inventive species. You’ve spread across the planet, found ways to live in all kinds of different environments, created a huge range of cultures and undergone two major revolutions that have changed the face of the planet.
You moved from wandering bands to settled communities as you discovered agriculture. This laid the foundation for the development of many different civilisations over thousands of years. You wondered about the meaning of life, why are you here, is there something greater than us, and created a whole range of explanations you call religions. And then, as you started to understand more about the nature of the world through your scientific and technical experiments, came an industrial revolution that has reshaped your planet in a couple of hundred years as opposed to the thousands of years it took for agriculture.
And in your little groups and often individually you wanted power over others. Ambitious and ruthless people have led your different civilisations and countries to fight against others to extend their power. You nurture the historical wrongs that have happened on your planet and let them drive your current policies and attitudes to others. And there are so many historical wrongs – all forms of imperialism, slavery, racism and more. And yet many Earthlings recognise these and try to address them. But as yet you’ve failed.
Today, you are in the midst of truly existential threats to the future of human life on this planet of yours. These are linked to the climate change and biodiversity loss caused by the very developments you yourselves have invented and promoted, as well as the inequality that undermines the stability of your societies, yet you continue to fight each other. We see another example of the stupidity of the human race being played out in Ukraine as you let a single individual cause suffering on a huge scale for their own need to assuage their thirst for power and perceived historical wrongs.
The understandable but wrong response to yet another of your crazy wars is for the rest of you to spend more on weapons and militarism, to face up against each other. And you still have so many more potential wars, such as over Taiwan, the continuing consequences of the war in Afghanistan, destruction in Yemen, and fighting for resources in other parts of the world. Because you’re clever you develop the weapons that if widely used endanger your own future life on this planet.
But there is another way. It’s one that requires something in short supply on your planet, and that’s wisdom. The wisdom to recognise that the way you’ve run things up to this point has got to change dramatically if you are all to survive and thrive on your highly unusual and, in this part of the universe, unique place where you have to live. People in all countries recognise that things need to be very different but they are not the ones in power. The only way you can succeed is by learning how to cooperate globally and see yourselves as common Earthling citizens of this amazing place, with a wide range of histories and cultures that have got you to where you are today. But for the future you need to let go of narrow nationalist identities. They are just a small part of the multiple identities any single one of you has. You need to create mechanisms to constrain and prevent gross inequality and the exercise of destructive power by the few, which undermines the well-being of the many.
You do like to tell stories, and you’re often too easily led to believe stories by others that are not true. You have to own, in each of your countries, the bad things you’ve done in your histories but not be defined by them. Not let them dictate the policies you misguidedly believe you have a right to. Your leaders need to recognise that the existential threats you face require you to abandon the old ways you’ve used to manage the world.
Instead of everyone building up military spending to fight against each other, you need to look at ways to improve human security and help you address the key challenges you face. It’s time to progressively switch from using resources to better kill each other, to ones that will nourish and help you survive on this planet in a cooperative and peaceful way. It’s not impossible for you to do this. You’ve shown you’re very inventive. You’re learning more and more about how this complex planet and the life on it operates.
It would be good if you could safely put all your leaders on an island and not let them off until they figured out the ways in which they are going to de-escalate the tensions between them, drop the historical claims to different bits of territory, and work towards a collective human security. This must redirect the intelligence, resources and logistical skills you currently put into military conflicts between yourselves to addressing the need for fundamental change in your economic and social systems, and in the technologies that are required to prevent great suffering through your failure to deal with the existential threats.
Now is the time to understand and address your different fears and how you project from one group to another the evils in your own hearts and minds. Establish dialogue among all your different communities, restructure your failed economics, and constrain the rich and powerful from leading you to destruction. And, if you can’t get the leaders of the countries round the world to do so, then start by drawing people from every country in the world together, to begin the dialogue and working on the path to a new way of running your world before it’s too late.
Photo credit: NASA Goddard – https://images.nasa.gov/details-GSFC_20171208_Archive_e000496
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