NEW YORK CITY: As the breadbasket of the world remains engulfed in conflict, homes in vulnerable and poor countries, as well as refugee camps around the world, are being burned.
The Russian-Ukrainian conflict threatens to trigger a global food crisis that could drive up levels of hunger and undernourishment in the Middle East, Central Asia and beyond. The three Fs – food, fuel and fertilizer – could become scarce commodities enjoyed by a few if the fighting in Ukraine continues.
The war broke out after two painful years of a pandemic that has destroyed livelihoods around the world, stretched financial resources and emptied wallets, especially in poor countries.
Fiscal difficulties and inflation were compounded by extreme weather conditions in the form of floods and droughts which added to the already considerable strains on the global economy, hampering the recovery.
The war in Ukraine has created a perfect storm as the two countries involved controlled 30% of the world market’s wheat exports in 2021, according to the Food and Agriculture Organization of the United Nations.
Russia, the world’s largest wheat exporter, and Ukraine, the fifth largest, alone have 50 countries in the world that depend on them for 30%, some up to 60%, of wheat imports. Russia and Ukraine also account for 75% of world sunflower oil production.
Wheat prices rose 55% a week before the start of the war, following a year that saw wheat prices soar 69%. It was also at a time when hunger was increasing in many parts of the world, particularly in the Asia-Pacific region, according to the FAO. The pandemic has led to an 18% increase in hunger, bringing the number of malnourished people to 811 million worldwide.
Arab countries, including Egypt, Lebanon, Syria, Libya and Tunisia, are heavily dependent on Black Sea grain imported from Russia and Ukraine. They buy over 60 percent of their wheat from both countries.
Some of these countries, more in economic crisis or in conflict, will now face a difficult situation. In Lebanon, for example, half of the wheat in 2020 came from Ukraine. The corresponding figures for Libya, Yemen and Egypt were 43%, 22% and 14% respectively.
The Arab Gulf region, according to IMF officials, will be less affected than other countries in the region due to the fiscal cushion provided by the windfall of high oil prices.
Countries are looking for solutions. But even if importers seek to replace Russia and Ukraine, they will face multiple challenges in finding an alternative source of wheat supply.
Rising energy prices are compounding the problem and leading to drastic increases in food and wheat prices. The new high price of oil makes it very expensive to import wheat from distant producers, either in North and South America such as the United States, Canada and Argentina, or in Australia. Shipping costs have also increased as well as insurance costs due to the conflict, which has aggravated the spike in wheat and food prices.
Many wheat producers have resorted to protective policies and restrictions on wheat exports, to ensure sufficient domestic supplies for their populations. The immorality of vaccine inequality might pale in comparison to that of wheat hoarding by countries that have the financial means to do so. Competition will be fierce and poor countries will be squeezed out of the market, causing shortages and tragedies.
A United Nations agency that feeds the poor and hungry is already feeling the financial pinch. The World Food Program buys nearly half of its global wheat supply from Ukraine and soaring prices are affecting its ability to feed the world’s hungry.
According to a WFP official, its spending has “already increased by $71 million a month, enough to reduce the daily rations of 3.8 million people”.
David Beasley, head of the World Food Programme, was quoted as saying “we will take food from the hungry to give to the hungry”.
Climate change and extreme weather conditions are compounding the problem, with floods and droughts in places like China and Brazil leading to reduced harvests and creating a need to import wheat from outside to meet domestic demand. This will increase pressure on global supply and lead to a wheat rush.
The other factor fueling the crisis is soaring fertilizer prices. Russia is the world’s largest fertilizer exporter, with 15% of global supply. Reports suggest he has asked his growers to stop fertilizer exports.
Sanctions imposed by the West on Russian entities are making payments difficult for exporters and importers, causing the fertilizer market to freeze. With less fertilizer available due to shortages and high prices, there will be less crop yield and more demand, which could further drive up food prices.
Russian wheat and fertilizer importers are frustrated and concerned about their ability to meet their needs, and have begun to blame.
Noorudin Zafer Ahmadi, an Afghan merchant who imports cooking oil from Russia to Afghanistan, told the New York Times that he was having trouble buying what he needed in Russia and complained about soaring price. But he didn’t blame Russia; rather, he pointed the finger at those imposing the sanctions. “The United States thinks that it only sanctioned Russia and its banks. But the United States sanctioned the whole world,” he told the newspaper.
In the worst cases, food shortages can trigger protests and instability in countries that are already unstable or facing financial difficulties.
Soaring food prices, especially those of bread, have historically been associated with riots and unrest in many countries in the Middle East and North Africa, especially the poorer ones. Asked about the potential regional impact of the deteriorating situation, Dr Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, said: “Rising food and energy prices would further fuel the inflation and social tensions in the two regions (Middle East and North Africa).
“Rising food prices will impact headline inflation and put additional pressure on low-income groups, especially in least developed countries with a high share of food in their consumption basket, and could trigger increased subsidies to counter these pressures, further worsening fiscal accounts,” he told Arab News.
Discussing the steps the IMF is taking to help soften the blow to affected countries, Azour said: “The crisis comes on top of policy trade-offs that have already become increasingly complex for many countries in the region with inflation growth, limited fiscal space and a fragile recovery.
“The IMF stands ready to assist MENA countries and others as it has been doing during the COVID-19 crisis, where the IMF has provided over $20 billion in financial assistance to several MENA countries, in addition to ‘approximately 45 billion dollars of special drawing rights distributed last year which constitute an important line of liquidity to face the various shocks’.
Antonio Guterres, the UN Secretary General, has announced new plans and measures for the organization to help alleviate the situation in the countries most affected by soaring grain prices due to the war in Ukraine. . He said he was in contact with the leaders of the IMF and the World Bank to coordinate their efforts in managing the crisis.
However, with Russian and Ukrainian forces seemingly locked in a stalemate and the conflict showing no signs of ending, the food crisis may just be the beginning.
International organizations are trying, at the intergovernmental level, to mitigate the impact of the food crisis on the most vulnerable countries. If these efforts do not bear fruit, the months and years to come will see hunger at every doorstep.