War in Ukraine Threatens World Food Security
Sharp rises in food prices in the past have caused political unrest
The ongoing war in Ukraine not only caused the disruption of Russian gas and oil supplies, forcing a sharp spike in energy prices, but also cut off all Ukrainian grain exports, 95% of which pass through the ports of the Black Sea. The same is true of Russian exports of grain from the Sea of Azov. This has created a mammoth crisis in global markets, and exacerbated an already severe food crisis.
The military escalation in Ukraine is a threat to global food security, energy supplies and political stability, experts say.
This comes on the heels of more than two difficult years in which governments have been dealing with the impact of COVID-19 and climate change on food availability.
Before the war erupted last month, the coronavirus had been causing a shortage of basic products in North Africa and the Middle East due to worldwide supply chain problems.
Now the Russian invasion of Ukraine has dealt a major setback to global food security, sending the price of several staples like wheat, corn and oil skyrocketing, along with the threat of food shortage.
Tim Prewitt, president and CEO of The Hunger Project, told The Media Line that food staples are now at risk in the Middle East and North Africa.
The MENA region, which constitutes about 5% of the world’s population, requires about 35% of global grain imports. Countries such as Libya, Egypt, Lebanon, the Palestinian Territories, Yemen, Tunisia and Algeria depend on both warring sides in the current East European conflict to provide half of their wheat imports.
“Both countries are essential food suppliers for low- and middle-income countries in which tens of millions of people are already food insecure,” according to Prewitt.
He says the war has created a “global food security crisis,” and that the “rise of prices is significant. It will lead to long-lasting food shortages, malnutrition and acute hunger for the people of the region.”
Russia and Ukraine provide more than 30% of international wheat exports, 20% of corn exports, and almost 80% of sunflower oil exports. This has made it difficult for the world to find other alternatives quickly.
Mohammed Khabisa, a Ramallah-based economic analyst, told The Media Line that the effects of Russia’s invasion of Ukraine on the markets in the Middle East and North Africa is massive.
Khabisa says the price of wheat rose from an average of $300 per ton before the war to an average of $500 per ton, before declining in recent days to $420 per ton.
“This led to a rise in the prices of unsubsidized bread in the Egyptian market, forcing some governments in the region such as Egypt, Jordan, Algeria and Lebanon to stop food exports and protect national local goods, for fear of a greater rise in the price of foodstuffs in global markets,” he said.
North African governments must absorb the increase in cost, in order to reduce the repercussions on the national economy
The Egyptian government said on Wednesday that it plans to restructure its public budget for fiscal year 2022-2023 in order to deal with the global crisis resulting from the war in Ukraine.
Egypt is the world’s largest wheat importer, bringing in about 60% of its grain from overseas, while Morocco ranks in the top 15 of the largest wheat importers. Russia and Ukraine accounted for 80% of the countries’ imports last year.
On Monday, Cairo fixed the price of unsubsidized bread amid a global surge in wheat prices.
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Last week, the United Nations Food and Agriculture Organization warned that there is a danger of severe hunger, as the war in Ukraine has threatened supplies of key staple crops.
“There is another negative effect, which is that the war hit the tourism sector, especially in Egypt, which depends on Russian and Ukrainian tourism, as it relies on it in the winter as a source of foreign exchange,” Khabisa said.
All this, he says, comes at a time when many governments in the Middle East have been trying to rein in inflation, since the last quarter of last year.
“The war in Ukraine increased the burden of inflation and put additional costs on its shoulders,” he said.
Egypt announced on Monday a tax relief and incentives package of 130 billion pounds, or $13 billion. The Palestinian government has announced similar steps such placing tax exemptions on wheat, bread and some agricultural products.
“Palestine is not separated from its regional surroundings, as when there is a rise in prices, but the government has suspended the fuel price hike until the end of this month, while other commodities have witnessed successive increases in the markets,” according to Khabisa.
He says this places additional burdens on the government by creating declining tax revenues at a time when there is almost a no international financial aid.
Alex Coman, a senior Israeli economic consultant, told The Media Line that the disruption in the supply of wheat and corn to the world has hit Israel, too.
“We have seen the prices of bread rise in the last couple of weeks,” Coman observed.
“In Israel we have price control on basic bread and its price is decided by the government to make sure that poor are able to buy bread,” he explained.
Next month is the Jewish holiday of Passover and the consumption of flour increases. But Coman doesn’t think Israel’s government will increase prices.
“During Passover we eat matzot, rich people and poor people. I believe the government will appease religious people and subsidize wheat products,” Coman said.
Khaled Benali, a Moroccan economist and analyst, told The Media Line that the “longer the war continues, the world will bear a heavy cost, as will Morocco and North African countries. This will lead to instability in global and regional food security.”
Benali says the problem is complex for Morocco, because this year there was a scarcity of rain during the winter season, and the country is facing the threat of a drought, which will greatly affect agricultural products.
“The magnitude of the negative impact on the national economy is enormous,” he said.
Meanwhile, Benali says, “North African governments must absorb the increase in cost, in order to reduce the repercussions on the national economy.”
According to Moroccan officials, Rabat’s wheat reserves do not exceed four months.
The bread eaten by the majority of Egyptians called colloquially “aish,” which translates literally to “life.” If the cost of a basic loaf bread goes up, this will be devastating for the Egyptian public and the government, according to Coman, who suggests that the government needs to absorb the increase.
“The Egyptian government needs to be smart enough to subsidize the price and swallow part of the increase, otherwise this will cause a lot of unrest in the Middle East,” he said.
For Egypt and other countries of the Middle East, Coman says, the price rise is “troubling news.”
In the past, sharp rises in food prices have caused political unrest in Egypt and other Arab countries, sending thousands of people to the streets.
“When I think of the Arab Spring, typically whenever the price of flour goes up, this is a source of unrest,” Coman said.
The less dependent countries are on imports the stronger they are
Many observers fear a “second edition” of the Arab Spring, as authoritarian regimes in the region struggle to secure a large enough stockpile of wheat and maize, or corn.
“I’m sure that the Egyptian government and other Arab governments are conscious that the Arab Spring was not unrelated to the food crisis of 2008-2009,” said Prewitt.
In addition to the pandemic and the Russo-Ukrainian war, Benali blames climate change for lack of food availability.
The longer the current conflict takes, the more prolonged the negative affect on the availability of food, in part because Ukraine is not expected to harvest this spring; this is because men took up arms in the fight against the Russian military, and women and their families fled the devastation for safety.
Prewitt says that countries like China stockpiling wheat to protect themselves from price shocks “only contributes to a spike in the price, making smaller countries have to pay more.”
He argues that growing food directly is the answer.
“We at The Hunger Project like other organizations like to see food produced locally, … the less dependent countries are on imports the stronger they are,” Prewitt said. “This is for them to feed themselves.”
