5 reasons war in Ukraine is a big blow to the global food system – POLITICO

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Guess Where The United Nations World Food Program provide more than half of the supply to the hungry globally by 2021? Yes, Ukraine.

When this “chest of Europe” is removed from supply chains and aid networks, the world will feel it.

The war between Russia and Ukraine, both food-producing powers, has sent prices of grains like wheat soaring and European governments scrambling to stabilize the market.

Europe could weather the storm in no time. Its farmers are paying higher prices for basic inputs like fertilizer and feed, but consumers can hardly see empty supermarket shelves. Costs will go up – especially for staples like sunflower oil – but the wealthy Western economies can afford to diversify.

The picture is more alarming in the developing world, where countries especially in the Middle East and North Africa – already affected by drought – could face the price of basic foods like bread. much higher. And if people go hungry or can’t feed their families, political unrest is likely to ensue.

Here are the top five impacts the crisis is having on the world food system.

1. Food prices skyrocketed

Ukraine is a huge exporter of commodities such as wheat, corn and sunflower oil, but Russia’s aggression means all trade has come to a halt as ships cannot leave Black Sea ports.

That has had a big impact, with grain and oilseed prices surging to record highs as traders worry about how long the disruption will last. “In the worst case scenario, there will be no exports from the region for a few years,” said Oleg Nivievskyi, an associate professor at the Kyiv School of Economics.

Although politicians have been careful to claim that there is no imminent food shortage in Europe, Ukraine remains the EU’s fourth-largest external food supplier, acting as a giant vegetable patch. . EU imports more than half of cornabout one-fifth of soft wheat imports and nearly one-quarter of vegetable oil imports from Ukraine.

Supply problems with Ukraine and Russia are a headache for food producers or growers in the EU, who have felt the pressure of rising energy prices and COVID-related inflation. . With food prices soaring, it will be more expensive for EU food processors to hold onto raw materials, while European farmers have to pay more for fertilizer to maintain high yields. Fertilizer prices – 30% of EU imports come from Russia – have skyrocketed 142% compared to this time last year.

This is ironic because EU farmers have for years complained about the success of Ukrainian exports. They often see Ukraine as a Brazil on their doorstep, able to knock them out by flooding the EU market with cheap manufactured food. Just a few months ago, French Agriculture Minister Julien Denormandie examined Ukraine when it introduced a new national labeling regulation that would help restaurant diners know if the chicken on their plate came from France or elsewhere.

2. Fear of famine

In turn, soaring cereal prices are fueling growing fears that millions of the world’s poorest people will struggle to feed themselves.

In the immediate crisis area are countries that are significantly dependent on Ukraine and Russia, such as Egypt, Tunisia, Algeria, Morocco, Lebanon and Turkey. According to Gallup Research. These countries will have to turn to other exporting countries to buy grain, pushing global prices even higher.

The two warring nations are grain heavyweights, accounting for 29% of global wheat exports, and bread is a staple in many of the poor countries they feed. As for Russia, no one knows whether Moscow wants to continue exporting as much food as before or restrict the flow, especially as its starving population is facing sanctions.

But it’s not just countries that are directly dependent on Ukraine or Russia that have cause for concern. Rising food prices globally will affect all of the poorest and most food insecure countries, from Bangladesh to Madagascar to Yemen. According to Matin Qaim, professor of agricultural economics at the University of Bonn, grain prices rose by 50% in the first two weeks of the conflict. He explained that as traders try to replace crops like wheat with other crops like rice or barley, global commodity prices are rising across the board.

Aid agencies will likely find the money they raise doesn’t go far. “We plan our procurement months in advance, so we don’t consider the immediate impact of operations,” said Jordan Cox, head of communications for the United Nations World Food Program. our other activities, but the price increase we felt immediately, the shipping cost that we felt.” , has shown 2022 to be “a year of catastrophic famine.”

Political upheaval followed the food shortages, and many analysts have pointed to the role of food shortages as a factor in the Arab Spring revolutions a decade ago.

When it comes to political issues, Qaim said: “The probability of this happening is very high and it has already begun.”

European Agriculture Commissioner Janusz Wojciechowski has warned a continued food crisis could “increase migration pressure on Europe.”

The next big test for the world’s food security will come in the summer, just as in the EU, Ukrainian farmers harvest their crops. If they are fighting on the front lines – or losing farmland entirely – the outlook could be bleak. It is too early to say whether those crops can be planted this spring: “Because of the war and this situation, nobody knows what will happen,” said Nivievskyi from the Kyiv School of Economics.

3. Protectionism on the rise

What happens when you’re a politician and you start to worry that you won’t be able to feed your population? You close borders, stockpile food and prevent anyone from exporting. Concerns about hoarding and commercial auctions are growing. G7 ministers gathered last week to send an urgent message about the importance of not imposing trade barriers at a time of severe market turmoil.

But not everyone listens. Hungary has imposed additional controls on grain exports, while claiming the move is not a full official export ban and it has been severely condemned by the European Commission. Meanwhile, Turkey, Argentina and Serbia – plus Ukraine and Russia themselves – have also imposed or threatened to impose export bans.

Everything is connected. “If the major exporters are doing that, prices in the international market in the rest of the world will go up even more and that harms countries that depend on it,” said Qaim from the University of Bonn. food imports.

US officials are worried China is strategically hoarding food to gain greater political leverage over food-import-dependent countries in Africa.

Meanwhile, France has embraced the crisis to argue that it is right to pursue its “food sovereignty” agenda of strengthening the ability of the European Union to feed itself on food. resources, instead of relying all on feed from Ukraine, soya beans from Brazil. and nitrogen-based fertilizers from Russia. Economy Minister Bruno Le Maire said this week: “All of France’s strategic intuitions about energy independence and food independence are corroborated by the aftermath of the war.”

In the text of a declaration EU leaders asked at a meeting in Versailles last week they pledged to boost the bloc’s own production of vegetable proteins – a traditional weakness of the EU’s heavily subsidized agricultural system.

4. Blue dreams fade away

The war in Ukraine could mean a return to Europe’s grand ambitions of making agriculture less of its impact on the climate and the environment.

Less corn from Ukraine means less European animal feed this year and higher feed prices for European farmers, who are already struggling to make ends meet. Traditionally, much of Ukraine’s livestock feed arrives via the now-locked Black Sea ports.

Concerns about growing food shortages have prompted calls to delay or even completely rethink the EU’s landmark sustainability plans for the agricultural sector. The European Commission is considering a proposal by a majority of EU agriculture ministers to temporarily remove the requirement to partially remove unproductive farmland to help enhance nature protection, and instead use it to grow fodder.

But this has led to stinging attacks from the Greens, who see it as an ideal opportunity to reduce the amount of resources allotted to the meat and dairy industry.

The Commission’s stated plans to think about supporting the (not the green) pig industry – one of the main industries squeezed by soaring grain prices – have also sparked a backlash. fiercely, including from the more economically liberal Nordic countries.

5. Sunflower shutdown

The EU imports half of Ukraine’s sunflower oil production, which can be found in everything from baked, canned and prepared foods, to spreads, sauces and soups. It is also widely used in confectionery products and is a difficult ingredient to replace in baby food.

“Obviously it will cause supply disruptions because we depend on it,” said Nathalie Lecocq, director general of FEDIOL, the association that sponsors EU vegetable refineries that supply the food industry. to Ukraine’s fairly regular supply of sunflower seed oil to Europe. “At this point, we’re really concerned about availability.”

Rubén Moreno, head of Spanish confectionery industry group Produlce, said its stocks were in danger of being depleted within as little as two to three weeks, and warned that “the degree of concern is high”. Ukraine’s status as a global supplier of sunflower oil means the consequences will be long-lasting. outside the confectionery and confectionery sector of Spain.

“We are in a situation where the entire global and European food industry is fighting for the remaining supply of sunflower oil,” he said, adding that while finding alternative oils already underway,” will not be enough to make up for Ukraine’s oil loss. ”

The restaurant and foodservice industries are also at the forefront here, as they rely on sunflower oil to cook and fry their meals. Arnaud Dufour, head of European Catering, which represents fast food chains such as McDonald’s, Starbucks and Burger King, said sunflower oil would be where most restaurants feel the first hit, with meat Poultry is likely to appear next, due to the rise in feed prices.

As the industry scrambles to find alternatives to keep supermarket shelves stocked, the costs of reformatting products and adjusting ingredient labels are likely to pass on to consumers. consumption. But with record food inflation squeezing household budgets, consumer groups are also warning retailers not to ignite fears of shortages and artificially inflated prices.

“We think there is no reason to increase the price of oil already on store shelves, as it is already being purchased at a stable price,” said Ileana Izverniceanu from the Spanish consumer lobby OCU. “The war in Ukraine is not an excuse to raise prices” or to raise concerns about shortages and triggering reserves, she added.


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