Explainer | Can the world spend its way out of the current global food crisis?

UN said Russia’s war on Ukraine could lead to ‘hurricane of hunger’ as 30 per cent of the world’s grain exports come from the warring countries
Rising protectionism is also severely distorting prices, with India, Malaysia and Indonesia recently clamping down on sugar, poultry and cooking oil exports

Ukraine war

Amy Chewin Kuala Lumpur

Published: 10:00am, 4 Jun, 2022

Why you can trust SCMP

The scale of the global food crisis that has followed Russia’s invasion of Ukraine cannot be underestimated.

The United Nations has said the conflict could precipitate a “hurricane of hunger”–especially in developing countries – given that 30 per cent of the world’s grain exports originate from the warring countries.

To compound matters, rising protectionism is severely distorting prices. From India to Malaysia and Indonesia, governments have recently clamped down on the exports of staples such as sugar, cooking oil and poultry.

The crisis is so severe that David Beasley, the executive director of the United Nations World Food Programme has said it was morphing into a “perfect storm within a perfect storm.”

“It literally could lead to hell on earth because what we’re going to be facing in the next 10 to 12 months is massive food processing problems, hunger, starvation, and then possibly and probably in 2023, a food availability problem,” Beasley said in a Financial Times podcast.

‘Hunger catastrophe looming’, Zelensky warns Jakarta town hall meeting

What is the true scale of the problem, what are the key chokepoints and how long will we remain in the eye of this storm? Here are the key things to know about 2022’s food crisis:

How bad is the crisis?

The UN says some 44 million people in 38 countries are at emergency levels of hunger. At the heart of the problem is the war in Ukraine.

Apart from supplying close to a third of the world’s wheat, the warring nations are also responsible for some 20 per cent of the world’s maize supply and about 76 per cent of its sunflower oil.

To top that off, Russia exports some 20 per cent of the world’s nitrogen fertilisers. And, along with its neighbour, Belarus, accounts for 40 per cent of the world’s exported potassium. Supply has been affected by Western sanctions on Minsk and Moscow, as well as the latter’s recent restrictions on fertiliser exports.

Paul Teng, a food security expert from the Centre for Non-Traditional Security Studies at Nanyang Technological University in Singapore, said the surging price of fertiliser caused some farmers in Thailand to plant less rice. This is likely to impact the coming harvest seasons and the status of national stocks. “Thailand exports 9 per cent of its surplus stocks. But if yields go down, they will be exporting less,” Teng said.

In his comments to the Financial Times, Beasley said an additional 50 million people could be dealing with hunger due to the crisis, on top of the 276 million people who are in now in that state following the Covid-19 pandemic.

01:29

India halts wheat exports as food security threatened by heatwave, Ukraine war

Is Russia’s blockade of Ukrainian ports worsening the crisis?

Teng said Moscow’s blockade of Ukrainian ports was making supply chain disruptions “even more fragile”. Since the start of the war on February 24, Russian forces have captured some of Ukraine’s largest seaports. Its navy controls major transport routes in the Black Sea, where extensive mining has made commercial shipping dangerous.

The African Union has warned of a “catastrophic scenario” for the region if the siege continues. African nations import 44 per cent of their wheat from Ukraine and Russia.

On Friday, Russian President Vladimir Putin received Senegalese President Macky Sall, who chairs the African Union, at his Black Sea residence in Sochi. The visit was aimed at “freeing up stocks of cereals and fertilisers, the blockage of which particularly affects African countries,” along with easing the Ukraine conflict, Sall’s office said.

What are organisations like the World Bank doing to help?

The World Bank on May 18 said it would make available US$30 billion to help stem the food crisis. The amount includes some US$12 billion in new initiatives and US$18 billion for existing projects.

Alongside the World Bank, the Asian Development Bank, the Food and Agricultural Organisation (FAO) and the World Food Programme are among the international organisations pitching in with various initiatives to help at-risk countries.

The US treasury has committed more than US$2.6 billion to emergency global food assistance schemes since February.

Teng said the US$30 billion figure from the World Bank was a pittance compared to the resources needed. He referenced the FAO’s estimate that US$265 billion is required annually to achieve zero hunger.

“It’s a drop in the bucket but any billions will help, especially if the help is focused. Implementation needs to be focused and not generalised. Otherwise the impact [of the aid] will be diluted,” he said.

Indonesian palm oil export ban could ‘lead to unrest’ as inflation hits poorest

Yeah Kim Leng, an economics professor at Malaysia’s Sunway University agreed. “The amount is minuscule given the varied purposes and numerous countries the World Bank seeks to finance.”

Yeah said the fund represented about 0.1 per cent of the annual output of the emerging and developing Asian economies.

Nonetheless for individual countries and farmers, the amount is still helpful to boost crop production and yields to alleviate local and country-level food shortages “but not large scale disruption to food production in the region,” Yeah said.

There are concerns that funds will not be disbursed fast enough for countries to address their short-term needs.

Governments will likely need urgent cash to procure inputs and fertiliser to stimulate and diversify agricultural production, said the FAO’s Indonesia representative Rajendra Aryal.

A shopkeeper sells wheat flour at a market in Mogadishu, Somalia. Photo: AP

How long will the crisis last?

In a report published on Wednesday, S&P Global Ratings credit analyst Samuel Tillaray said rising food prices and diminishing supplies are likely to last through 2024.

“Our analysis shows low and low- to middle-income countries in Central Asia, the Middle East, Africa, and the Caucasus could be worst hit by the first-round impact,” Tillaray said.

During the Financial Times podcast, Beasley, the World Food Programme chief, said a reopening of the Ukrainian port of Odesa along with increased fertiliser supply and avoidance of export bans could help avert immediate famine.

With some US$27 trillion in aid packages spent during the pandemic, “the world [doesn’t] have any reserve money... to throw at our problems so we’ve got to fix this thing,” he said. “And we can’t afford to ignore [the problem]. That’s why the ports [are] critical right now. The world’s very, very fragile. People are struggling in these poor countries unlike any time period we’ve seen before.”

Additional reporting by Agence France-Presse, Reuters