The war in Ukraine has exacerbated the world food crisis and food stocks are enough for just over two months. The statement is from agricultural data company Gro Intelligence and was received by the United Nations (UN) in May.
“It is a fact that can drastically reshape the geopolitical era”, the UN informed the chief executive of Gro Intelligence, Sara Menker. Wheat stockpiles are currently at 20% of annual consumption – they should be at least at
% – and there is no prospect of recovery.
Much of the stocks are blocked in Russia and Ukraine, which together used to produce around 30% of wheat and 17% of corn consumed by the world. India, the biggest wheat producer, behind only China, canceled most of the export, prioritizing the internal supply.
Other major food exporters, which could serve as an alternative – such as the United States, Australia and Argentina – have already reached their maximum production. The United States Department of Agriculture forecasts a decline of 17, 8 million tons by the end of the season 2022/2023 in the country, due to drought.
Stocks are blocked on Ukrainian soil
Ukraine used to export an average of 6 million tons of food every month – in addition to wheat, it is a major producer of sunflower and corn. With the Russian invasion of the country, exports dropped to around 1 million tonnes.
According to the French-based specialist in world agriculture Agritel, the next Ukrainian harvest should have a low of more than 30%. The reasons range from a lack of fertilizers (which do not reach the territory) to the loss of labor.
Due to the blockade of ports and railways, it is estimated that around 20 millions of tons of wheat are blocked on Ukrainian lands. A small portion still manages to be transported through Romania.
Given Ukraine’s strategic location, the consequences are global. Other countries are halting exports to ensure food for the local population. The lack of food and agricultural inputs is a global emergency.
G7 warns of low exports
India, which at the beginning of the war reached out to the poorest countries that depended on Ukrainian wheat, had to close its ports. This month, the Asian country officially announced that it will prioritize “food security for India’s 1.4 billion inhabitants”.
The country had to ban cereal exports, in addition to passing on the increase in costs for farmers with fertilizers, feed and fuel. After the Indian declaration, the G7 (made up of Germany, Canada, the United States, France, Italy, Japan and the United Kingdom) issued a statement warning of the “aggravation of the food crisis”.
Many countries in Africa, the Middle East and Asia they are dependent on wheat exported from Ukraine via the Black Sea. The largest cereal importer in the world is Egypt, followed by Tanzania and Mozambique, which are now destitute.
The G7 asked the World Trade Organization (WTO) to identify necessary measures to avoid the errors of the world crisis of 58. At the time, there was a lack of food, such as rice, soybeans, wheat, corn and cereals, which generated an increase in inflation rates around the world, an intensification of the world economic crisis and hunger. According to experts, however, the situation is already the same or worse than it was 14 years ago.
War, pandemic and climate shocks
Importing countries are also at the mercy of price inflation of energy, fertilizers and staple foods. All of this together amounts to 30% of current expenditures in less developed countries.
According to the researcher at Fundação Getúlio Vargas (FGV) Marcelo Neri, we are already in a crisis similar to that of 2008. “Whether because of the war in Ukraine, climate shocks or disruptions in the pandemic, we are already in a major crisis”, he warns.
According to the Food and Agriculture Organization of the United Nations (FAO), inflation of food accumulated an increase of 58% in April of 2023, compared to February of 2020 – before the pandemic. From this increase, 35 percentage points were accumulated from October 2021 to now. “It’s a perfect storm on top of two previous crises: that of the great recession with the escalation of inequality and the pandemic”, emphasizes Neri.
Few ways out for the world: advantage for Russia
In the face of the crisis, countries in Europe, the United States, Australia, Argentina and Brazil were raised as possible alternatives in the wheat production. However, according to Sébastien Abis, researcher at the Institute of International and Strategic Relations (Iris), “no country can increase exports”, because all of them already produce at maximum capacity and must also meet national demand. . Ironically, the only one that could export more is Russia, despite the sanctions.
According to the American Ministry of Agriculture (USDA), there is a forecast of a decline in production world – especially in Australia and Argentina – but a rise in Russia. The head of agricultural commodities research at Dutch bank Rabobank, Carlos Mera, predicts that the country led by Vladimir Putin will produce 84, 9 million tons of wheat this year.
World organizations seek solutions
“A war in Europe causes famine in Africa”, says the head of the International Monetary Fund (IMF), Kristina Georgieva. Egypt is one of the major concerns of the IMF, along with Tunisia and Lebanon. The world body announced that “it is mobilized to guarantee support to the most vulnerable”.
Presidering the European Union, France created an initiative that aims to strengthen national production and ensure transparency in stocks, the Mission of Food and Agricultural Resilience (Farm).
“The short-term objective is to calm tensions in markets. It is essential that countries keep borders open and avoid excess stocks,” the French state said in a statement.
Regarding this European mobilization, the IMF leader informed that the initiative will only succeed if it is supported by the main producers of the G20, India, China and Indonesia. She also highlights the importance of involving international organizations such as FAO and the UN Fund for Agricultural Development (IFAD). “The long-term solution is to increase productivity in Africa. This requires international financing”, highlights Georgieva.