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
“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.
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?
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.
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.
What are organisations like the World Bank doing to help?
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.
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.
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