Food Shortage: The Halo Effect of War

High food prices have triggered a global crisis that is driving millions more into extreme poverty, amplifying hunger and malnutrition. Millions of people have been forced to evacuate their homes because of Russia’s unjustifiable war against Ukraine (Europeโ€™s breadbasket), which has resulted in massive human fatalities. The world food market has been significantly and permanently impacted by the conflict.

In response to the surge in fertilizer prices globally, influenced by increased natural gas prices, earlier this year Russia imposed a restriction on the export of ammonium nitrate from February 2nd to April 1st, ensuring supply for its domestic farmers. Compounding the issue, wheat prices skyrocketed to their greatest levels since 2008. At the time of the Russian invasion, Ukraine was the fourth-largest exporter of corn, wheat, and sunflower oil, with Russia and Ukraine together accounting for 27% of the world’s wheat exports and 53% of the sunflower and seed exports. In March, David Beasley, the Executive Director of the World Food Programme (WFP), issued a warning that the conflict in Ukraine might intensify the world food crisis to “levels beyond anything we’ve ever seen.”

According to a World Bank report, the COVID-19 pandemic caused a major setback in global poverty reduction. Now, rising food and energy prices fueled by climate shocks and the war have halted the recovery. The number of people who are experiencing acute food insecurity and will need urgent assistance is likely to climb to 222 million people in 53 countries and territories, according to a joint report by the WFP and the Food and Agriculture Organization. The U.S. Department of Agriculture estimates that China would own 50% of the world’s wheat, 60% of the world’s rice, and 69% of the world’s corn by the first half of the agricultural year 2022. China has kept its food reserves at a “historically high level,” which has raised the price of food globally.

The International Monetary Fund (IMF) research estimates that an additional $5 billion to $7 billion in spending is required to support disadvantaged families in the 48 nations most impacted by the increased import costs for food and fertilizer. It will need an extra $50 billion to alleviate severe food insecurity. As per the World Bank Food Security Update, the agricultural and export price indices closed 1% and 6% higher, respectively, than reported in the last update prepared on December 1, 2022; the Cereal Price Index closed at the same level. Domestic food price inflation continues to remain high in almost all low-, middle-, and high-income countries.

The world’s already insufficient, unsustainable food systems have been further damaged by the effects of ongoing regional wars, climate change, the COVID-19 epidemic, the war in Ukraine, supply chain disruptions, and high and fluctuating food, fertilizer, and fuel costs. The upshot is that the world is going through its third major food crisis in less than 20 years. By 2030, the globe will not be able to achieve a low Global Hunger Index (GHI) score without a dramatic reversal in these patterns.

The complex geopolitical conflicts caused by Russia’s war on Ukraine, leading to sanctions imposed against Russia, has created two different frames of reference. The current energy crisis, surging from this war, has led to record-high input natural gas costs for fertilizers. Governments around the world are in the halo effect, by developing sanctions as a way of curbing the war implications. It must be noted that 50% of the world’s food relies on fertilizers.

According to their 2022 GHI ratings, 44 nations have significant or worrisome levels of hunger. Additionally, 20 nations (not concentrated in any particular region) with severe, significant, or worrisome levels of hunger were ranked higher on the 2022 GHI than they were in the 2014 assessment.

World Trade Organization Director General, Okonjo-Iweala has stressed at the General Council and various international meetings, including the G20, that lifting export restrictions is โ€œfundamental to reduce price spikes and volatility.โ€ According to four individuals familiar with the proposal, which was made during discussions to prolong a pact on food imports from Ukraine, Russia wants the West to loosen limitations on state agricultural lender Rosselkhozbank to assist Russian grain exports.

Ultimately, we must seek a common path towards mitigating the high risks of starvation and food insecurity across the world. As discussed above, the impact of war is not threatening only Europe. As French President Emmanuel Macron said when urging Asian countries to join the “increasing consensus” against the conflict in Ukraine, the war is “your problem” too. The world is in grave need for collective action towards addressing the food crisis around the world, irrespective of political and economic differences.

Vishwas Grover
Follow me
Latest posts by Vishwas Grover (see all)