THE CONTEXT: Russian hostilities in Ukraine are preventing grain from leaving the “breadbasket of the world” and making food more expensive across the globe, threatening to worsen shortages, hunger and political instability in developing countries. This article analyses various reasons for the global food crises and presents a clear picture of the present situation.
THE ISSUE: While post-pandemic global demand, extreme weather, tightening food stocks, high energy prices, supply chain bottlenecks and export restrictions and taxe shave been straining the food market for two years, the recent convergence of all these factors following Russia’s invasion is unprecedented and has sent food inflation rates spiking around the world. The halt in Ukrainian exports has pushed the Food and Agriculture Organisation’s (FAO) Food Price Index, which tracks the international process of the most globally traded commodities, to its highest point in March 2022, since the record began in 1990.
DATA TO UNDERSTAND THE EXTENT OF GLOBAL FOOD CRISES
WHY RUSSIA AND UKRAINE ARE IMPORTANT FOR GLOBAL FOOD SECURITY
- Russia and Ukraine together account for more than a quarter of the world’s wheat supplies.
- Russia’s share in the global exports of wheat, the world’s most widely grown crop, is some 20%, while Ukraine accounts for 8%, according to the U.S. Food and Drug Administration’s Foreign Agricultural Service (FAS).
- Wheat is a staple food for at least 35% of the world’s population, as per the estimates of the UN Food and Agriculture Organization (FAO).
- About 50 countries depend on Russia and Ukraine for more than 30% of their wheat imports, according to the FAO.
- If Azerbaijan and Georgia source more than 80% of their imported wheat from Russia and Ukraine, Turkey, Egypt, Bangladesh and Lebanon meet over 60% of their imports from these two countries.
- Besides wheat, Ukraine is the world’s eighth-largest producer and fourth-largest exporter of corn, accounting for 16% of global exports.
- Furthermore, Ukraine, which produces up to 46% of sunflower seed and safflower oil is the world’s largest exporter of sunflower oil.
IMPACTS OF WAR ON FOOD PRICES
- As of June 1, 2022, the Agricultural Price Index was 40% higher compared to January 2021, according to the World Bank.
- Maize and wheat prices rose 42% and 60%, respectively, from the levels of January 2021.
- Global food, fuel and fertilizer prices are projected to be sharply higher this year and will remain elevated into 2024, the World Bank estimates.
- Almost all economies in the world have been hit by higher food prices. Across the western world, there’s a cost-of-living crisis with food and energy prices rocketing.
- In the U.K., inflation numbers have already hit a 40-year high. Almost 90% of emerging markets and developing economies experienced food price inflation greater than 5% this year.
- Low-income countries that are reliant on imports for basic food consumption are the hardest hit. According to the UN World Food Programme (WFP), Ethiopia, Nigeria, South Sudan and Yemen remain at ‘highest alert’ as hotspots with “catastrophic conditions”, as Afghanistan and Somalia are added to this category.
CAUSES FOR THE GLOBAL FOOD CRISES
BLOCKADE AT BLACK SEA
- Before the Russian invasion of Ukraine started, Ukraine had the capacity to export up to six million tonnes of wheat, barley and maize a month, mainly through its ports in the Black Sea/Sea of Azov.
- In the eight months before the war, some 51 million tonnes of grain were exported through Ukraine’s Black Sea ports. But exports have collapsed since the invasion as the Russian war effort is entirely focused on Ukraine’s eastern and southern parts along the Black Sea/Sea of Azov coast.
- Now, several Ukrainian port cities, including Mariupol, Kherson and Berdyansk, are under Russian control. Although the southern cities of Mykolaiv and Odesa, which are known as the ‘Pearl of the Black Sea’, are still with the Ukrainians, commercial ships cannot dock at these ports because of two reasons :
- Ukraine has mined the waters around these ports as a deterrent against potential Russian attacks and Russia has enforced a naval blockade in the waters of the Black Sea.
ECONOMIC SANCTIONS ON RUSSIA
- Besides the blockade, the western sanctions on Russia are also contributing to the crisis. Russia, besides being the world’s top wheat exporter, is also a leading exporter of fertilizer, an essential commodity for food production.
- Russia and its ally Belarus together account for some 38% of potassic fertilizers, 17% of compound fertilizers, and 15% of nitrogenous fertilizers. Fertilizer prices are also on the rise, which would make food production costlier.
- Russia’s food and fertilizer sectors were not directly targeted by western sanctions, but the sanctions on its financial sector, which made payments difficult for Russia, have complicated its exports, including food grains.
- Also, the targeted sanctions on Russian oligarchs have choked finances for the agricultural industry.
PRE-WAR EXISTENCE OF GLOBAL SUPPLY CHAIN DISRUPTIONS
- The impact of the pandemic has been disastrous for the supply chain, with persistent effects. The varying trends of economic recovery, lockdowns, and slowdowns, at different points in time, in different hubs across the globe have clogged the movement of goods across borders. This has not only impacted the manufacturing industry but also the food processing industry and now the ongoing conflict has also added to it in terms of constrained global food supply chain.
CLIMATE CHANGE AND FOOD SECURITY
- Climate change has impacted the production of various food crops especially due to the changes in the regular rainfall pattern and rising temperatures.
- Climate change impacts the biophysical conditions in which crops grow. Some crops are less heat resistant — as the atmosphere grows warmer, these become less productive. We’re already seeing declines in the productivity of staples like wheat.
- There are also significant nutritional impacts — as more carbon dioxide gathers in the atmosphere, crops have less nutrition and fewer vitamins and minerals in them.
- Food distribution is impacted — increasing wildfires and floods, war, and internal conflicts as well as the affordability and accessibility as seen in multiple countries disrupt the distribution systems transporting food from farmers to consumers. This results in higher food prices.
GLOBAL REPORT ON FOOD CRISES 2022
- An annual report named Global Report on Food Crises 2022 was launched by the Global Network Against Food Crises (GNAFC).The report is the flagship publication of the GNAFC and is facilitated by the Food Security Information Network (FSIN).
- Around 40 million more people globally experienced acute food insecurity at crisis or worse levels in 2021 than in 2020.
- Over half a million Ethiopians, southern Madagascar, South Sudanese and Yemenese are suffering from acute food insecurity.
- Over 193 million people in 53 countries or territories experienced acute food insecurity at crisis or worse levels in 2021.
MAIN DRIVERS FOR FOOD INSECURITY
- Conflict forced 139 million people in 24 countries/territories into acute food insecurity.
- This is an increase from 99 million in 23 countries/territories in 2020.
- It forced over 23 million people in eight countries/territories into acute food insecurity, up from 15.7 million in 15 countries/territories in 2020.
- Over 30 million people in 21 countries/territories suffered acute food insecurity in 2021 due to economic shocks, down from over 40 million people in 17 countries/territories in 2020.
Need for an Integrated Approach:
- There is a need to have an integrated approach to prevention, anticipation, and better targeting to sustainably address the root causes of food crises, including structural rural poverty, marginalization, population growth and fragile food systems.
Need to Prioritize Smallholder Agriculture:
- The report demonstrated the need for greater prioritization of smallholder agriculture as a frontline humanitarian response, to overcome access constraints and as a solution for reverting negative long-term trends.
Strengthening a Coordinated Approach:
- The need is to strengthen a coordinated approach to ensure that humanitarian, development and peacekeeping activities are delivered in a holistic and coordinated manner.
IMPACT OF RUSSIA UKRAINE CONFLICT ON INDIA’S AGRI SECTOR
- The economic sanctions on Russia by the West provides India with a chance to fill the void with Indian goods and commodities and serve as a blessing in disguise.
- Indian wheat can be sold at a highly competitive price in the global market. Egypt, Lebanon, Libya, Syria and Tunisia have been major buyers of wheat from Ukraine. Russia and Ukraine meet about one-third of global demand. The Russian attack has halted these exports, so these countries are likely to go for Indian wheat instead.
- Another agricultural commodity which saw the impact of the conflict is maize, which Ukraine is the third-largest exporter. The country accounts for about 3% of the global maize production and around 13% of global exports. As exports from Ukraine decline, Indian maize will be able to take advantage.
- The major threat to our food prices and security comes from chemical fertiliser shortages. Russia is the second-largest producer of potash, which is used in the production of Di-ammonium phosphate (DAP). Now DAP is critical for chemical/industrial agriculture and without it farmers may experience poor yields and many times no germination.DAP prices have been sky-high. India has also experienced a shortage right before the rabi sowing season.
- A lack of availability of potash and NPK (majorly sourced from Russia and Ukraine) would lead to a significant increase in input costs and ultimately result in higher food prices for customers.
- Sunflower oils (90 % of which are sourced from Russia and Ukraine) present a serious case, especially for heart-conscious ones. Indian frying pans may miss this precious oil, and with no healthier alternatives, prices are already up and shipping companies are charging higher insurance premiums for freight consignments from the Black Sea. This will have a direct impact on edible oil prices. Adding to our troubles is India’s growing demand of cooking oils.
- The war between Russia and Ukraine can adversely affect the Indian tea industry as Russia is one of the biggest importers of Indian tea. It is not only due to the blockage of shipments but also due to economic sanctions which leads to payment crises
THE ANALYSIS OF THE ISSUE
- Ukraine and Russia mainly export staples to developing countries that are most vulnerable to cost hikes and shortages. Countries like Somalia, Libya, Lebanon, Egypt and Sudan are heavily reliant on wheat, corn and sunflower oil from the two warring nations. The burden is being shouldered by the very poor and marginalised. There is a humanitarian crisis which needs to be addressed at the earliest.
- Besides the threat of hunger, spiralling food prices risk political instability in many countries. Rising food prices were one of the causes of the Arab Spring, and there are worries that history may repeat itself in other parts of the world.
- Starvation and famine are stalking parts of Africa. Prices for staples like wheat and cooking oil in some cases are more than doubling, while millions of livestock that families use for milk and meat have died. In Sudan and Yemen, the Russia-Ukraine conflict aggravated the crises on top of domestic crises.
- United Nations has been trying to secure an agreement to unblock Russian exports of grain and fertilizer and allow Ukraine to ship commodities from the key port of Odesa. But progress has been slow.A vast amount of grain is stuck in Ukrainian silos or on farms in the meantime. And there’s more coming, Ukraine’s harvest of winter wheat is getting underway soon, putting more stress on storage facilities even as some fields are likely to go unharvested because of the fighting.
- The increases are fueling faster inflation worldwide, making groceries more expensive. Some countries are reacting by trying to protect domestic supplies. India has restricted sugar and wheat exports, while Malaysia halted exports of live chickens, alarming Singapore, which gets a third of its poultry from its neighbour.
THE WAY FORWARD:
- The only practical solution to take Ukrainian grains to the global markets is to open the Black Sea routes. Further, to ease the pressure on global food items, Russia will also have to step up exports of both grains and fertilizers. For this, it is imperative to stop war at the earliest. The countries must also try to import from alternative suppliers until a peace agreement is reached between Russia and Western nations. For instance, Egypt recently made a deal with India to help replace some of the 80% of its wheat imports which come from Russia and Ukraine.
- The war in Ukraine has laid bare for all to see the fragility of the dominant global food system based on highly specialized industrial production methods, transnational supply chains, and excessive concentration. Countries that rely on imports from Russia and Ukraine must find alternative sources of food imports and diversify their food sources. It’s imperative that grain exporting countries refrain from the temptation to impose export restrictions, which could further drive up food prices.
- In the longer term, more resilient food systems will require countries to sustainably strengthen and diversify their domestic food production. This means investing in improving domestic food production capacity to reduce excessive reliance on imports. It also means investing in infrastructure for local food markets, and support for more sustainable forms of agriculture such as agroecology that absorb carbon and rely less on chemical fertilizers.
THE CONCLUSION: A long-drawn conflict between Russia and Ukraine would not only disrupt global agricultural supply chains and trade but also worsen the current economic woes caused as a result of the COVID-19 pandemic, including the global surge in inflation levels. Against this backdrop, it is crucial that India take adequate steps to reduce the impact of the conflict in Ukraine on its agricultural sector, including by seeking additional import options and tapping into export markets.The only practical solution to take Ukrainian grains to the global markets is to open the Black Sea routes. And to ease the pressure on global food items, Russia will also have to step up exports of both grains and fertilizers.
Mains Practice Questions:
- Evaluate the impact of the Russia – Ukraine war on global food security.
- The Russia-Ukraine conflict has been a boon as well as a bane for the Indian agriculture sector. Elucidate.