The Global Food Crisis and Security
As the consequences of global economic crises due to the pandemic are still not recovered, the global economy in general, because of the Russia-Ukraine war, is being shaken not only by the energy crisis (oil, gas supply), but also by the break of the chain of supply of raw materials and what is presented as the most dangerous is the fact that the signals of food products shortage are already present.
The issue of food security, the current problems, consequences and the alternatives for the solution of this crisis have been in the focus of more developed countries. This, because food security issues are considered important for securing human life, economic development, they are of particular importance for global stability.
Just three weeks after the Russian military invasion of Ukraine, President Macron was the first to warn of the danger of a food crisis threatening the global economy, stressing that this war would have serious consequences for the food supply chain and the rise of their price was inevitable. Following the recent G7 summit, French Foreign Minister Jean-Yves Le Drian also warned international leaders that the war in Ukraine would continue, and that they needed to be prepared.
The same was stated by the German Minister of Economy, who warned that the food crisis is already present, while the German Foreign Minister, Annalena Baerbock, accused Russia of "grain war". The government in Moscow is trying hard to expand Ukraine's war in the world, Baerbock said at the end of a meeting of foreign ministers on Saturday.
This made the global effects of the war the center of the G7 discussions. "Russia's aggressive war against Ukraine as well as Russia's one sided actions to restrict Ukrainian agricultural exports have led to strong price increases in commodity markets," the final statement said. This leads to a threat to "global food security". The G7 countries have called on Russia to “cease immediately its attacks on key transport infrastructure in Ukraine, including ports.”
Why and How is the Grain Crisis Happening?
First, as President Biden put it in recent days, there will be crisis as Russia and Ukraine are Europe’s granary. Here we have taken into account the fact that these two countries are in the 5 largest countries producing and exporting grains especially wheat (which, as is known, serves as a raw material for the production of flour and all flour-based products). Ukraine is among the most important suppliers of grains worldwide.
According to the figures of the UN Food Organization, in 2021 Ukraine ranked third as an exporter of barley and fifth place for the export of wheat. One-tenth of the soft wheat and 13 percent of the world's corn comes from Ukraine: just the European countries import more than half of their corn needs from Ukraine while Russia is the top wheat producer in world by about 40 percent. Second, this war seems to be continuing. Thus, the disruption of routes and the grain supply chain is not a temporary or short-term issue.
The war has damaged and blocked transport routes for international supplies, road infrastructure, railways and especially the main ports on the Black Sea which are the main centers of this transport. 25 million tons of grains are meanwhile stranded in Ukrainian ports, mainly in Odessa. These cereals are urgently needed, mainly in poor countries in Africa, the Middle East, etc.
Third, the shortage of grains, especially wheat, has increased demand, accompanied by an increase in their price, adding here the increase in the price of oil, gas, raw materials also as a result of war, accompanied by high inflation in all countries, having a greater impact on increasing the global level of poverty.
Fourth, the war has increased the impossibility of reaping crops in Ukraine, which increases the possibility of a longer extension of this crisis. Fifth, some other countries have taken measures to limit wheat exports (India), reducing the amount of this product in international markets.
The Efforts to Deal with This Crisis
The war in Ukraine will have massive consequences for food security around the world. This is why the G7 Industrialized Countries have been working to resolve this crisis since its inception. First, the aim is to find alternative routes for transporting grain from Ukraine, which due to ports blocked by Russia in the Black Sea, can no longer export as before.
For this reason, the EU Commission will support the facilitation of transport by land and rail. Following the problems with the Romanian railways, the possibility of other export alternatives is being considered, such as the one through the Baltic countries. Secondly, efforts are being intensified to free the Ukrainian ports blocked by Russia.
Third, in view of other alternatives The G7 countries are looking for alternatives to transporting grain by ship from Ukraine to the seaports of the Baltic States. But even in this regard it must be seen, whether the conditions are met how to anchor the ships in these ports. Normally 5-6 million tons of cereals per month can be exported from Ukraine. This can only be achieved by sea, rail supplies are much scarce.
Fourth, the US, Canada, Australia, Brazil, as well as other major world producers of wheat and other grains have expressed willingness to contribute to resolving this crisis, although the distance of markets and other needs, do not favor it much the process. Last but not least is the reorientation of each country's domestic agricultural and trade policies and the setting of priorities in line with the situation.
The Food Crisis and Albania
Although the signals for fluctuations in the food market are appearing, mainly due to the interruption of the grain supply chain (our country has secured for some time the continuation of grain supply) and rising prices and inflation, it seems that this crisis has not yet hit hard, but it has arrived here as well.
Even though we are on the eve of the harvest, if this global crisis deepens, of course a blow here is not excluded. Because just like the energy crisis, that of raw materials, rising inflation, are imported in our economy. Thus, in the face of this crisis, measures must be taken and alternative ways must be found, concretely.
First, a reorientation of the trade supply chain for the business of grain-wheat and food products is required (since they are mainly imported goods).
Second, the reorientation of agricultural policies towards production, for which there are shortages in the market due to the interruption of the supply chain, increasing the possibilities of meeting the needs as much as possible with local products.
Third, in view of this goal, financial support (for the production of these products) to farmers is needed.
Fourth, it is necessary to review the management of the state reserve, both in terms of the type of food products and in terms of their duration, to cope as much as possible with the impact and consequences that may come from the global food crisis.
Food security is very important, it is of vital importance - human, strategic, economic, but also political. Fifth, which always remains a priority, is the restructuring of the economy, considering the problems posed by the global crises of the last three years.
With the situations created in the developments of the global economy, with the emerging crises and their intertwining, the problems and their consequences, including Food Security, the view and measures to deal with them must be medium and long-term, to guarantee a more secure future of sustainable economic and social development.
(*Academician, economy expert, ex-minister and MP, Panorama, May 18, 2022)