Food crisis-today and tomorrow

Food shortages have begun in the countries of the world. Will the situation worsen now? What scenarios are waiting for us? When can the situation happen again? This article "Gazeta.uz " offers you various analyses and opinions on this issue.

In recent years, there have been many events that can put the world in a state of serious crisis. First of all, the COVID-19 pandemic has become a serious test for the global economy, while the economy is now in a state of stabilization, Russia has launched military operations on the territory of Ukraine, as a result of which European and US sanctions against Russia, as well as Russia's retaliatory actions against them, have severed the chain of mutual food trade around the world. Has the crisis started? Was it caused only by the war? In which direction can the situation develop? Under what scenario and when can the situation improve in this regard? "Gazeta.uz " this article brings to your attention various analyses and opinions of international experts and publications on this issue.

Why did the food crisis arise?
Experts say that this crisis has long been overdue as a result of numerous conflicts, weather changes and errors in economic calculations. In particular, at the end of January, The Times wrote that an increase in gas prices could provoke hunger around the world. The article says that Russia uses gas as an instrument of influence.

And the armed conflict between Russia and Ukraine accelerated this process and further complicated the situation — Ukrainian grain exporting ports were blocked by the Russian armed forces, and Russia itself refused to export its products. And without the supplies of food and fertilizers carried out from these countries, it is simply impossible to solve the current problem.

Russia is the world's largest wheat exporter, and Ukraine ranks fifth in this regard. The share of Russia and Ukraine in world wheat exports is almost 30%. The blockade of Ukraine has increased wheat prices on the world market by 53% (since the beginning of the year). The price rose by another 6% after India announced the termination of exports due to severe drought.

These countries account for the bulk of world exports not only of wheat, but also of barley (Russia and Ukraine account for 29% of world exports of barley), corn (15%) and sunflower oil (75%).

Even before the outbreak of hostilities on the part of Russia, representatives of the World Food Program warned about possible difficulties that could be observed in 2022. China, the largest wheat producer, last year reported a delay in planting due to flooding, and this year's harvest is likely to be the worst in history. In addition to the drought observed in another major wheat—producing country, India, low rainfall in American territories reduces grain yields. "The worst drought in the last 40 years has also affected Somalia. Welcome to the era of global warming," writes The Economist.

What is the situation now?
"Before the war, Ukrainian exports of wheat and corn were growing, while Russian exports were declining. But recently we have seen that Russian exports have started to increase sharply," says Nabil Msedi, Director of the AgFlow Agricultural Market Analysis organization. He said that the reduction of Ukrainian exports is a victory for Russia.

Russia and Ukraine have common export partners (especially in North Africa and the Middle East). Faced with the problem of food shortages, many of these countries are now turning to Russia for help in order to replenish their stocks. According to The Times, Egypt, Iran and Turkey are currently the largest Russian buyers, and Russian exports to these countries increased by 500%, 481% and 381%, respectively.

"While the Russian authorities are enriching their coffers, according to the UN World Food Program, 50 million people around the world are at risk of starvation," writes The Times. The head of the European Parliament commission, Ursula von del Leyen, said that Russia "uses hunger and grain crops as a tool to show its strength."

Food and the power source (gas, electricity) are inextricably linked. Countries that, unfortunately, do not have their own production facilities on both sides remain in a very difficult situation. In March, an economic crisis broke out in Sri Lanka, which was affected by the crisis caused first by the pandemic, and then by the conflicts between Russia and Ukraine. A shortage of supply, a sharp rise in prices, a shortage of energy supply and the devaluation of the local currency caused a number of protests in the country, and the President of Sri Lanka was forced to declare a state of emergency twice: in April and May. In Africa and other South Asian countries, the situation is also not optimistic.

An article published by The Economist says that currently almost 250 million people in the world are on the verge of starvation, and hundreds of millions more people could be below the poverty line if conflicts are not stopped and food supplies are not restored. It is noted that today the number of undernourished due to high prices for basic foodstuffs has increased from 440 million to 1.6 billion.

According to The Economist, Ukrainian food exports provided food for 400 million people, but exports were suspended due to the fact that Ukraine extracted its water resources, and Russia blocked the port of Odessa. Warehouses of grain products in Ukraine (which were not affected by the war) are overflowing with products such as barley and corn, and farmers have no space left to store the next harvest, which is expected at the end of June, which means that the products may rot. And there are not enough resources or manpower in the country for further sowing operations. Russia, in turn, may face a shortage of seeds and pesticides, which have so far been purchased from European Union countries, but now exports have stalled.

Worse, rising prices for fertilizers and energy reduce profit margins. Sanctions and competition for natural gas have destroyed both markets. If farmers reduce their fertilizer consumption, the yield of world crops will collapse at the very time we need.

"The reaction of confused politicians to these events can only worsen the situation. Since the beginning of the conflict, 23 states from Kazakhstan to Kuwait have announced the introduction of strict restrictions on food exports. More than 1/5 of fertilizer exports are limited. When trade stops, hunger begins," writes The Economist.

"All scenarios of the game of mutual accusations are ready: the West condemns Putin for the special operation, and Russia condemns Western sanctions. Indeed, most of the problems arose as a result of the actions of the second party, and the sanctions only aggravated them. A great argument to justify inaction. Meanwhile, many are starving, and some are dying," The Economist article says.

What awaits the world? Can the situation improve?
On May 18, UN Secretary-General Antonio Guterres warned of the threat of a "global food shortage" that is expected in the coming months, and said that this situation could continue for years.

According to The Economist, in such a situation, the poor suffer more. "In developing countries, families spend 25% of their budget on food, and in sub-Saharan Africa-40%. In Egypt, bread makes up 30% of the diet. The Governments of many importing countries cannot afford additional subsidies to the poor. Especially if they also import energy, the situation may be even worse — because now this market is also turbulent."

Experts say that Russia may be the only country that is expected to achieve high grain yields this year. Due to the drought that is observed in a number of Asian countries, as well as in Algeria, Iraq, Morocco, Syria, yields are expected to be low this year. Meanwhile, both in Brazil and in large agricultural countries such as Canada, the USA and France, crops have suffered due to the vagaries of the weather.

Antonio Guterres noted that "if this year we are talking about opening access to food (we are talking about products in Ukraine), then next year we will talk about food shortages that will cover 1.6 billion people around the world." The UN Secretary General called on Ukraine to develop a grain transportation plan.

Governments will have to work together to improve the situation, and first of all it will be necessary to start by ensuring that markets are open. "Indonesia, which provides 60% of the world's palm oil exports, lifted a temporary ban on exports at the end of May. Europe should help Ukraine with sending grain to the ports of Romania and the Baltic states by rail and road, although, according to the most optimistic forecasts, only 20% of the harvest can be exported in this way. Grain should be supplied only to the poorest," writes The Economist.