Rising food prices and the worsening plight of large segments of the world’s population as a result of the Ukrainian crisis are exacerbated by known and unhealed distortions in food systems. The same anomalies constantly threaten global food security, understood as access to food(food security). To the topic, iPES FOOD devotes a special report with the eloquent title, ‘Another Perfect Storm?‘ (1)
Rising food prices, the impact of the Ukrainian crisis
The tragedy of dead, wounded, displaced people and the destruction of what has been built in lifetimes of work is added to hunger as a systematic consequence of violence. In Ukraine as in more than 40 active conflict zones around the world-Yemen, Syria, Afghanistan, Ethiopia, Sahel, etc. – at the expense of more than two billion people, half of whom are in extreme poverty.
The effects of the Russian-Ukrainian conflict reverberate severely on global agri-food markets, among others. Indeed, the blockade of Ukrainian and Russian grain exports is in addition toexport restrictions imposed in 20 countries. To protect the domestic market from price volatility, but also to create temporary shortages and price increases.
Starvation price increases
The rising food (and energy and commodity) prices we are facing in advanced economies are likely to exacerbate hunger in many of the world’s poorest and most vulnerable regions.
Wheat prices reached a 14-year high in March, up 20 percent from February and up 34 percent in a year, according to the FAO. Corn also reached record prices, due to poor harvest forecasts. And soaring fertilizer prices-with the Russian and Ukrainian fertilizer halt-exacerbates the crisis for ‘conventional’ farmers. (2)
Africa most at risk
Africa is the region most at risk. Nearly 40 percent of total African wheat imports come from Russia and Ukraine. In Eritrea it accounts for 100%. In Somalia more than 90 percent and in the Democratic Republic of Congo more than 80 percent.
The price of bread has nearly doubled in Sudan and increased by 70 percent in Lebanon. Meanwhile, price volatility is already spreading to soybean, corn and rice markets.
According to the FAO, the global number of undernourished people will increase by 13.1 million in the near term (2022/23), including 6.4 million in Asia-Pacific and 5.1 million in sub-Saharan Africa. After the pandemic, the war. And the UN goal of eradicating hunger by 2030 seems further away.
Structural weaknesses in food systems
Amplifying the effects of the conflict in Ukraine on food security are a series of malfunctions in agrifood systems that have already emerged in the global food price crisis of 2007-2008, the subsequent price spikes of 2010-2012, and the crisis from Covid-19 in 2020-2021.
iPES FOOD analyzes the fundamentals.
Addictions to food imports
In the face of crises such as the current one, some countries are highly vulnerable because of a dependence on imported food (and fertilizer) that descends from several phenomena. As early as the colonial era, a change in the traditional diet was initiated with the introduction of wheat, rice and corn crops. The same then conveyed through international aid, even to countries where it is impossible to grow them.
At the same time, even where these crops were in use, cash crops took over. In Africa, the transition began with structural adjustment programs in the 1980s. But the trend is widespread.
For example, tobacco cultivation is believed to have replaced vegetables and legumes in Bangladesh, as well as cassava, millet and sweet potatoes in a number of African countries.
In contrast, the development of high-yielding wheat varieties during the ‘green revolution’ in India led to the replacement of legumes and rice with wheat monocultures.
The grain merchants’ club
Exacerbating many countries’ difficulties is their dependence on a limited number of exporters. According to USDA data, only 7 countries plus the EU account for 90 percent of world wheat exports and only 4 countries account for 87 percent of world corn exports.
Instead, the world grain merchants are four companies, controlling 70-90%. They are known as ABCD, meaning Archer-Daniels Midland, Bunge, Cargill, Dreyfus. These giants, along with silo operators and large farmers, certainly hold large grain reserves, although the data are secret.
The debt spiral
The same import-dependent countries are also highly indebted. This creates a vicious cycle in which the need for liquidity to pay debts and import food prevents any improving investment for the future.
Despite repeated promises-at every crisis-to intervene in the debt of disadvantaged countries, nothing has been done. In 2020, at the height of the pandemic, 62 developing countries spent more on repaying debt than on health care.
The stress caused by the 2007-2008 price crisis and dependence on food imports was the cause of popular uprisings with dramatic outcomes, iPES FOOD recalls. But the past does not always teach.
Unsustainable agricultural production
In response to rising food prices and growing food security concerns, there have been increased calls for countries to shift production patterns: from fuel to food, from feed to food, or from export-oriented cash crops to locally consumed commodities. (3)
Holding back this transition to sustainable, resilient and diverse food systems, however, are several obstacles:
– specialization in monocultures (in the U.S. ‘corn belt’ or the Argentine ‘soybean belt,’ for example) rests on massive investment, training, equipment, logistical networks and support policies that are impossible to dismantle at a stroke,
– biofuel production is increasingly being encouraged by governments in the face of rising oil and gas prices,
– food systems, supply chain and food industry are now strongly structured on the current global grain and corn exchange systems,
– farmers around the world are increasingly dependent on synthetic fertilizers. Global demand for the three main ones (nitrogen, phosphate, and potassium) increased by 8.5 percent from 2002 to 2016. Only 6 crops (corn and wheat first and foremost) account for two-thirds of demand, and a handful of exporting countries dominate in trade. The tragedy is that the more synthetic fertilizers are used, the more the soil is depleted, again filled with the same fertilizers for quick and abundant harvests.
Markets between opacity and speculation
Another underlying flaw that has turned the Ukraine crisis into a global food security crisis is the opaque and dysfunctional nature of grain markets, which are subject to heavy speculation.
Some countries have increased the planting of wheat in anticipation of the Russian invasion: India, Australia, the United States, Canada, Argentina and South Africa.
Currently, the relationship between stock of grain and overall consumption is at 29.7 percent (down slightly from 29.8 percent in 2020/2021) and remains satisfactory and only slightly below previous years for wheat (35.3 percent) and corn (25.8 percent); at 37 percent, the ratios of stock of rice and consumption are actually higher than previous years.
‘Supply disruptions are occurring as new/ diverted grain shipments are expected, leading to temporary shortages and rising prices, but at the moment there is no global food supply shortage,’ iPES FOOD says.
The financialization of commodities
An important role in the price shock then goes to commodity speculation, aided by a lack of transparency, particularly on grain stocks. Commodity futures play an important role in determining grain prices, providing liquidity to markets and thus making them work.
However, ‘excessive speculation’ alters the logic based on supply and demand. And when the object of the ‘bets’ is food, the world’s poorest people are affected. In 2007-2008, a massive influx of speculative financial investment contributed to soaring futures prices and what is now being called a global food price crisis.
Poverty and food insecurity
Another structural weakness that the current crisis has exposed is the fact that hundreds of millions of people do not have the income or resources to adapt to sudden shocks.
More than 50 percent of farmers and rural workers live below the poverty line in several countries in the Global South with the largest rural populations.
The poorest people in low-income countries spend more than 60 percent of their income on food. Under this condition, even small price increases can have devastating impacts, vulnerabilities that have been cruelly exposed by the Covid-19 pandemic.
Climate change
Climate shocks now regularly plague agriculture, creating persistent vulnerability and uncertainty in global markets. The IPCC estimates that climate change has reduced agricultural productivity growth by 21 percent since 1961 and up to 34 percent in Africa and Latin America.
Major agricultural regions are currently facing the worst drought in decades, including much of West Asia and North Africa, the Horn of Africa, parts of Brazil and Argentina, and the North American Midwest.
Famine and instability
After four years without rain and years of unsustainable resource management (including through mining practices), Madagascar is facing famine.
Sri Lanka is experiencing its worst economic crisis in 70 years, including food shortages and power outages, as spikes in global food prices have combined with economic mismanagement, including a failed transition to organic farming.
The countries of the Sahel (Burkina Faso, Mali, and Niger in particular), Kenya, Ethiopia, Sudan, and South Sudan were already experiencing socioeconomic instability and climate shocks before the Ukraine crisis and are now particularly vulnerable.
According to the UN Global Crisis Response Group, some 69 countries-home to 1.2 billion people-are severely or significantly exposed to food, energy and financial instability.
In this context, even underfunded humanitarian agencies struggle to keep up. Even social safety nets in rich and middle-income countries are under pressure. In the United Kingdom, the world’s fifth-largest economy, 1 in 10 households are likely to draw on food banks as food prices rise in the coming months.
Myopic solutions
In the face of the crisis, there has been no shortage of short-sighted proposals for solutions. Three examples.
A) Suspension of environmental regulation to ‘feed the world’
At the G7 in April 2022, World Bank President David Malpass called for increased production of food, energy and fertilizer. TheInternational Food Policy Research Institute (IFPRI) immediately called on wheat producers to do everything possible to increase production.
In this groove, in the EU are threatened the intentions of
Farm2Fork
: by 2030 to halve pesticides, reduce fertilizers by 20 percent, convert 25 percent of agricultural soils to organic, and restore 30 percent of peatlands.
Pressed by agricultural lobbyists, the European Commission postponed two key legislative proposals-the Sustainable Use of Pesticides (SUR) regulation and nature restoration targets-and allowed member states to farm (even with chemicals) on land previously designated as ‘ecological focus areas. Similar measures have been proposed in the United States.
In Brazil, President Jair Bolsonaro has said that rising fertilizer prices justify the continued exploitation of the Amazon, including on indigenous lands, in search of minerals.
These policies, which exploit crises to demolish sustainable development, are called the ‘shock doctrine‘ by Naomi Klein.
B) New funding to AGRA
To answer to the effects of the current price increase on African countries also started the call for increased funding to the Alliance for a ‘Green Revolution’ in Africa (AGRA), launched in 2006 with the aim of ‘reducing food insecurity by 50 percent in at least 20 countries and doubling the incomes of 20 million smallholder households’ by 2020.
The program is largely funded by the
Bill and Melinda Gates Foundation
, but about a third of the $1 billion spent over the past decade comes from other multilateral agencies, including USAID, UKAID and the German Department for Development Cooperation (BMZ).
The stated goals are still there. And one wonders about the appropriateness of seeking an additional $1 billion to 2030, given that independent analyses show a 31 percent increase in hunger in countries where AGRA operated between 2006 and 2018.
C) New organisms and fragmentation
Further problem is the hasty creation of new bodies to deal with crises. A modus that ends up creating overlaps with pre-existing bodies, weakening their role.
For the Ukrainian crisis, a end of April, the German development minister called for the creation of a new alliance for food security global, bringing together donor countries, international organizations and the private sector to address the effects of the war in Ukraine and coordinate the distribution of food aid. And a UN Global Crisis Response Group (GCRG) on food, energy and finance was also quickly formed.
In addition, the crisis has prompted new calls for the creation of a scientific panel-an ‘IPCC for Food‘-to expedite scientific advice to policymakers.
How to avoid the next ‘perfect storm’
The meaty iPES FOOD special report concludes with a recommendation to take 5 steps to address the emergency and initiate a transformation of the food system.
1 – Provide financial assistance and debt relief to vulnerable countries,
2 – Crack down on commodity speculation, including by introducing a tax on funds indexed to these commodities,
3 – Build regional grain reserves and a global food aid apparatus suitable for prolonged crises,
4 – Diversify food production and trade systems. Shift to more resilient and locally adapted crops (water stress, for example) and overcome WTO (World Trade Organization) logics that have allowed highly subsidized agriculture in the Global North to decimate domestic production in other regions.
5 – Rebuild resilience and reduce harmful dependencies through diversity and agroecology, overcoming the dominance of industrial agriculture that has once again proven to be a failure in coping with a crisis.
Marta Strinati
Notes
(1) iPES FOOD. Special Report. Food Price Crisis. Another Perfect Storm? https://ipes-food.org/pages/foodpricecrisis
(2) Rising fertilizer prices are now skyrocketing and shortages are looming. Russia, Ukraine, China and Kyrgyzstan have imposed restrictions on fertilizer exports, and Belarusian exports have been sanctioned since 2021. Russia and Belarus together supply 40 percent of the world’s potash fertilizer; in 2021, Russia was also the leading exporter of ammonium nitrate fertilizer (49 percent of global export markets) and NPK products (38 percent), ammonia (30 percent) and urea (18 percent).
(3) Greenpeace urged the EU to shift production of fodder crops for intensive livestock into food crops for human consumption, arguing that diverting just 8 percent of the EU’s fodder crops would be enough to offset the loss of grain imports from Ukraine and ensure food access for the bloc’s poorest inhabitants. https://www.greenpeace.org/eu-unit/issues/nature-food/46105/reduce-eu-meat-factory-farming-to-replace-ukraines-wheat/
A letter signed by hundreds of scientists suggests that switching to organic farming on 25 percent of the EU’s land-as called for by the EU’s ‘Farm to Fork’-would allow Europe to drastically reduce nitrogen fertilizer imports and thus reduce exposure to price increases and shortages.
Professional journalist since January 1995, he has worked for newspapers (Il Messaggero, Paese Sera, La Stampa) and periodicals (NumeroUno, Il Salvagente). She is the author of journalistic surveys on food, she has published the book "Reading labels to know what we eat".
