Trends in world food grain prices. — Humanitarian Data Exchange (WFP) and WSJ Market Data (FactSet)
THE humanitarian crisis in Ukraine continues to worsen every day. Evidence of war crimes in Bucha and Irpin, forced deportations to Russia and family separation, Soviet-era “filtration camps” in Russian-occupied territories, and the use of cluster munitions and even TOS-2 thermobaric weapons in civilian areas are on the rise. But perhaps the biggest consequence for the world is the Russian blockade of Ukrainian food exports through the Black Sea.
Using world hunger as a geopolitical bargaining chip could prove as dangerous as nuclear power in Zaporizhzhia and set a terrifying precedent for the rest of the 21st century. First, the weaponization of hunger against Ukrainians brings back memories of the Holodomor of 1932-33. Second, it puts 49 million people in Africa and the Middle East on a path to acute food insecurity according to the United Nations World Food Programme. Lebanon, for example, depends on Ukraine for 60% of its wheat, as the country lost its national wheat silos two years ago in the Beirut port explosion. Djibouti, Somalia, Mauritania, Libya, Tunisia, Oman, Ethiopia and famine-stricken Yemen also depend on Ukraine for their wheat consumption. Prior to this year’s blockade, the WFP obtained 40% of its wheat from Ukraine for its emergency food aid programmes. Ukraine represents 10% of the world wheat market, 15% of the corn market and 13% of the barley market. With more than 50% of world trade, it is also the main player in the sunflower oil market. Ukraine, having in its possession 25% of the most fertile soils in the world — black soil or chernozem — is a crucial player in the world food market. Thus, Russia’s blockade carries a credible threat of starvation, mass destabilization and forced migration across much of Africa and the Middle East.
Indeed, the global food crisis is far from monocausal. The effects of climate change including droughts, extreme summer heat and the fallout from Covid-19, supply chain disruptions, Chinese hoarding of essential food grains, oligopolistic effects on the global network of food logistics from ABCD companies and protectionist measures such as export restrictions by India and Indonesia combine to create one of the most extreme inflation and food insecurity environments in a decade, this which could have explosive geopolitical ramifications. It should be noted that the Arab Spring of 2011 followed a sharp spike in wheat prices in the region.
The world produces enough food for 12 billion people, well above the total world population. Yet an alarming 800 million people are going hungry, with a chronic increase in hunger since 2015. A systems-theoretic approach offers analogies to the stresses that built up in global financial markets before the crisis. Great Recession of 2008. Four major corporations – Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus – control around 90% of the world’s trade in grains, seeds and chemicals, as well as processing and packaging, with the types of extreme collusive synchronizations that fall under antitrust regulations in other industries. This concentration of market power led to the surge in windfall profits during the Covid pandemic and the Ukrainian crises. Sixty-two new food billionaires have been sitting quietly since 2020 as the majority of the world, especially large swathes of the Western Sahel, the Horn of Africa and the poorer countries of the Middle East, is unable to buy food grains or even the cash to provide direct cash transfers to those who need food but cannot afford it.
Yield growth for wheat, maize and other crops has declined in many countries due to extreme heat, extreme weather and droughts. By some estimates, without effective adaptation, global yields could decline by up to 30% by 2050. accessible to everyone. Measures such as redistributive taxation aimed at the most systemically important agricultural and food distribution companies, localized production, precision fermentation, permaculture and identification of less common “superfoods”, diversification into food sources such as cassava, millet, quinoa, buckwheat as well as seeds with a high nutritional profile such as hemp, flax, pumpkin, etc., inducing artificial rains, lab-grown meat, Innovative methods for minimizing water consumption and eliminating harmful chemicals in the growing process can give the global food system some respite.
After the commodity trade war with former US President Trump from 2018, China is on track to have hoarded 69% of the world’s corn reserves, 60% of its rice and 51% of its wheat by mid-2022. This reflects China’s holdings of the world’s largest foreign exchange reserves, but given that the Chinese make up only 18% of the world’s population, it jeopardizes food security everywhere else. Unilateral export restrictions and other restrictive trade practices are also to blame. By surprise, India, the world’s second largest wheat producer, banned wheat exports on May 13, 2022. In late April, Indonesia, the world’s largest producer and exporter of palm oil, required companies to sell 30% of their planned production. exports of crude palm oil and olein into the country, down from 20% previously, under a scheme known as the domestic market obligation. The new restriction will remain in place at least until the end of October. By early June, 22 countries had imposed restrictions on wheat exports, covering 21% of global grain trade. These restrictions resulted in a 9% increase in the price of wheat, about one-seventh of the total price increase since the beginning of the war. In total, monitoring of the World Bank’s Global Trade Alert suggests that 74 export restrictions such as taxes or outright bans have been announced or imposed on fertilizers, wheat and other food products. year-to-date – 98 counting those that have expired. This makes the diversification of supply for countries desperately dependent on Russian and Ukrainian agricultural production much more complicated than it otherwise might have been.
On May 24, 2018, the United Nations Security Council unanimously passed a resolution condemning the use of food insecurity and starvation as a tactic of war. In an earlier conflict, the Saudi-Emirati coalition effectively closed the Red Sea port at Hodeidah in Yemen, the main entry point for food imports, on which the population depends, and for humanitarian supplies. In late 2018, the UN said more than half of Yemen’s population urgently needed food aid to avert starvation. Effectively ending the blockade and ensuring that the UAE and Saudi Arabia are brought to justice is a thorny but essential humanitarian and legal imperative. Meanwhile, the Tigray war in Ethiopia has already starved half a million people and millions more need urgent food aid. This calls for humanitarian as well as legal intervention.
But the most acute and urgent food crisis today is due to Putin’s desire to devote agricultural production to his war efforts in Ukraine. The recent grain agreement concluded separately by the two countries with the UN and Turkey seems to have freed up some export capacity (20 to 25 million tonnes of blocked grain) along the Black Sea through the Bosphorus Strait. Yet a Russian strike on the port of Odessa just a day later, along with complications from clearing the sea in an active war zone, are increasing risks and insurance premiums for commercial cargo carriers. Furthermore, the agreement only formally covers 120 days, with no way to secure an extension or guarantee that the new crop remains optimal. Ukraine’s pre-war export base of 55 million tonnes looks hard to recover, as attacks on grain silos and scorched-earth tactics in Russian-occupied farmland continue. Meanwhile, some 600,000 tonnes of Ukrainian grain was reportedly stolen, reflagged and sold as “Russian exports” in June. Ukraine produces enough food every year to feed 400 million people, but without proper help and support Ukraine will not be able to grow these crops and export them. This year’s grain will begin to rot very soon. Therefore, if they are not sold in time, Ukrainian farmers will run out of available storage capacity and lose cash, which will hamper investments for next year’s planting campaign. Such developments would further undermine global supply chains for essential food grains. There is therefore an urgent need to update and enforce international law which treats the militarization of food supplies as a war crime, as well as to ensure that Ukraine regains its pre-war export capacity through help and support.
Around the world, the number of hungry and malnourished people has been declining for at least two decades, but started to rise after 2015. We cannot afford to return once again to the dark days of empty stomachs. , wasted children and preventable famines. All hands must be on deck: donors, policymakers, military experts, aid workers, international governance bodies, multinational corporations and, above all, ordinary, informed citizens. We owe it to the hungry and the desperate. And time is running out fast.
Sahasranshu Dash is a researcher affiliated with the South Asian Research and Development Institute, Kathmandu, Nepal. Svitlana Oleshko is a data scientist in the PhD program at the Helmholtz Center, Munich, Germany. Denis Pilash is a researcher in international relations at the Chair of International Regional Studies at the Taras Shevchenko Kyiv National University, Kyiv, Ukraine.