What is the global food crisis and how did it start?

According to the World Bank, many countries were facing growing levels of food insecurity before the onset of the novel coronavirus pandemic threatened people’s incomes and disrupted supply chains. More than 800 million people were estimated to be suffering from hunger in 2020 due to factors including geopolitical conflict, socio-economic conditions, natural hazards, climate change, and pests.

Now, with the ongoing pandemic, associated disruptions in global supply chains, and the war in Ukraine, the risk to global food security has heightened.

Since the war began in February this year, the price of oil, wheat, corn, and other commodities have surged as countries like Moldova, Serbia, and Kazakhstan introduce export bans and quotas on wheat, maize, and sunflower oil.

UK-based publication The Spectator, in a report published on April 12, indicates that the United Nations Food and Agriculture Organisation’s food price index has risen 13 per cent in the last month to stand a third higher than a year ago.

As of April 21, 2022, the World Bank Agricultural Price Index is up 43 per cent compared to January 2021. Maize and wheat prices are 56 per cent and 55 per cent higher, respectively, compared to January 2021.

“The rise in food prices is exacerbated by a dramatic increase in the cost of natural gas, a key ingredient of nitrogenous fertiliser. Surging fertiliser prices along with significant cuts in global supplies have important implications for food production in most countries, including major producers and exporters who rely heavily on fertiliser imports. The increase in food prices and supply shocks can fuel social tensions in many of the affected countries, especially those that are already fragile or affected by conflict,” the joint statement from the heads of the World Bank Group (WBG), International Monetary Fund (IMF), United Nations World Food Program (WFP), and World Trade Organization (WTO) recently informed.

As fertiliser prices are projected to move higher, as Russia and Ukraine, two of the world’s leading suppliers, are engaged in war, analysts have, as a result, curbed their outlook on future harvests.

Why should Jamaica care?

A prolonged war between Russia and Ukraine will continue to contribute to an increase in oil prices, which translates to transportation and food production costs going up and so too importation bills.

“The threat is highest for the poorest countries with a large share of consumption from food imports, but vulnerability is increasing rapidly in middle-income countries, which host the majority of the world’s poor. World Bank estimates warn that for each one percentage point increase in food prices, 10 million people are thrown into extreme poverty worldwide,” the joint statement from World Bank President David Malpass, et al, shared in March.

At present, a number of countries are facing high food inflation at the retail level, increases in fertiliser, currency devaluations, among other challenges associated with global food price hikes.

It is these second effects that should be a concern to Jamaica, which imports wheat, corn, cereals, soybean oil, and vegetable oil for consumption in households, manufacturing, and tourism. In addition, the country imports fertilisers for use in agricultural production.

Meanwhile, CEO of the Seprod Group Richard Pandohie in a tweet questioned why the issue wasn’t given much attention by authorities.

On April 23, Pandohie wrote on his Twitter account: “Rising food inflation is a problem but an even more ominious risk is the global tightening food supply (sic) Surprised that a big importer not treating this as a national crisis (& possible opportunity). Haven’t we learn’t anything from the vaccine hoarding? Every man for himself.”

International response

In response to the dangers of rising food prices, WBG President David Malpass, IMF Managing Director Kristalina Georgieva, WFP Executive Director David Beasley, and WTO Director General Ngozi Okonjo-Iweala have proposed actions to provide emergency food supplies and deploy financial supply support to help the most vulnerable household and countries. Such actions, they said, would facilitate “unhindered trade” and boost investment in sustainable food production and nutrition security.

In particular, they have called on the international community to provide grants to countries with the most urgent financing needs.

“We are committed to combining our expertise and financing to quickly step up our policy and financial support to help vulnerable countries and households as well as to increase domestic agricultural production in, and supply to impacted countries. We can mitigate balance of payments pressures and work with all countries to keep trade flows open. In addition, we will further reinforce our monitoring of food vulnerabilities and are quickly expanding our multifaceted policy advice to affected countries guided by the comparative advantages of our respective institutions,” the leaders stated.

“We also urge the international community to help support urgent financing needs, including through grants. This should include financing of immediate food supplies, safety nets to address the needs of the poor, and for small farmers facing higher input prices. We also urge all countries to keep trade open and avoid restrictive measures, such as export bans on food or fertiliser, that further exacerbate the suffering of the most vulnerable people. It is especially important not to impose export restrictions on humanitarian food purchases by the UN’s World Food Program,” they added.

FAO General Director Qu Donyu has likewise called on the international community to fund a Food Import Financing Facility (FIFF) to help poorer countries stymie the impact of the global food price increases. Along with complementing existing mechanisms in the UN system, the fund aims to facilitate improvements in agricultural production and productivity as well as increase future resilience through investments in sustainable agrifood systems.

So far, Qu said, FIFF has been stress-tested by the FAO for its impact on global markets.

“The lesson learned is that we need to increase agricultural production and productivity in the world while being sustainable,” the FAO director general told the G20 meeting.

“It is high time to work together for ending hunger and malnutrition in the world,” he added.

On April 26, at a seminar on food security organised by the WTO, Director General Okonjo-Iweala shared that as a member of the newly established United Nations Global Crisis Reponse Group on Food Energy and Finance, the organisation is supporting the call to keep markets open and avoid unjustified export restrictions. At that meeting, 80 member countries of the WTO pledged not to impose export restrictions on food purchases.