Table of Contents Show
- How could wheat be a weapon – is it really that important?
- Is it really possible that there might not be enough wheat and corn for everyone?
- How many starving people are there, according to calculations?
- How the war in Ukraine caused another war – the grain war (and why it is advantageous for Russia)?
For more than a year, the world’s attention has been focused on the war in Ukraine. It seems to be not only the main tragedy on the planet but also the main humanitarian catastrophe.
But unfortunately, this is not the only crisis that humanity is dealing with right now. There are others, but we either forgot about them completely or postponed attempts to deal with them until better times. We recently wrote about one such crisis – the climate problem. After the start of the war, it has significantly worsened, but who cares about the climate now?
And there is another global threat looming over tens of millions of people – that of world hunger. Yes, it was talked about before the war – perhaps some of you will remember how in the autumn of 2021, the Executive Director of the World Food Programme, David Beasley, and billionaire Elon Musk argued remotely about how to feed the hungry. It’s easy to guess that the war has only made things more complicated. Now it’s time to talk not only about the threat of hunger, but also about a real grain war, the outcome of which Russia hopes to lift some of the Western sanctions.
How did the invasion of Ukraine lead to the largest food crisis on the planet? Is it really true that there is not enough wheat for everyone? Why has grain become another powerful weapon for Russia in the current war? And what role can this weapon play in the near future? All of this is covered in my text today.
In May 2022, the international humanitarian organization Christian Aid conducted a survey in the UK to find out how well the country’s residents are informed about current global crises. The absolute majority of respondents, 91%, are aware of the war in Ukraine. However, only 23% of respondents have heard of the humanitarian catastrophe in the Horn of Africa region (the eastern part of the continent, including Ethiopia and the surrounding countries of Somalia, Eritrea, and Djibouti).
Similar results were found in a survey conducted by Harris Poll in the US in March. According to it, 95% of Americans are aware of the Ukrainian conflict, and 89% are concerned about it. Both figures are higher than for any other current global crisis, including the situation in Afghanistan, the famine in Ethiopia, and the protests in Myanmar.
In turn, the international humanitarian organization Save the Children, which helps children who are victims of conflicts and crises around the world, opened a traditional fundraising campaign since the beginning of the war in Ukraine. Save the Children’s head, Janti Soeripto, noted that 75% of the donations received in the “Ukrainian” account were from people who had never transferred money to the organization before. The total amount that was collected exceeded the fundraisers for other countries by tens of times.
In short, it is a fact: the invasion of Ukraine has displaced any other global problems from the agenda, including the threat of unprecedented hunger that loomed even before the war. The world’s attention was completely captured by the war, so it has been very difficult for humanitarian organizations to collect donations for other countries during all these months.
And this is despite the fact that hunger is being talked about from the highest platforms. On March 11, 2022, the UN held an emergency meeting of its Food and Agriculture Organization (FAO). By that time, the ports of Odessa and Nikolayev on the Black Sea, which are the sea gates for exporting 85-90% of Ukrainian grain and oil crops, had already been blocked for 15 days. Moreover, both sides of the conflict were involved: Ukraine had mined the coastal waters (as Russia claims, although Ukraine does not deny it), and the approach from the sea is controlled by the Russian fleet.
A two-week halt in terminals revealed the contours of an impending catastrophe. Firstly, Ukraine is the fifth largest country in the world in terms of grain exports. Secondly, it exports grain to the regions where the problem of hunger is most acute – Africa and the Middle East. And thirdly, almost 50% of the UN’s food program is provided by cheap Ukrainian grain, which is then distributed as humanitarian aid to the poorest countries.
In April and May, the situation with the blockade of ports not only did not resolve but also seemed to be hopeless. Diplomats were shifting responsibility onto each other: the West accused the Kremlin of deliberate port blockade; in turn, Russia either denied the problem or accused Ukraine and the West.
And all this – against the backdrop of drought in the USA and Europe, floods in Sudan, hyperinflation and protests in Sri Lanka, sanctions on Belarusian fertilizers, and a dozen other factors. All of them, playing simultaneously, have ensured the highest wheat prices in the world since the 1980s.
And in June, when “war weariness” became a mass phenomenon, the topic of world hunger finally made the front pages of world media. Turkey initiates negotiations and takes on the role of guarantor for the safe export of grain. Russia suggests “exchanging” the unblocking of ports for the lifting of some sanctions. And Russian President Vladimir Putin is accused of turning the threat of famine into one of the tools of war.
How could wheat be a weapon – is it really that important?
Wheat is the foundation of the diet for 35% of the world’s population. This is not only because it grows all over the world (and can even be grown in moderate climates), but also because it has an optimal composition that includes starch, protein, B-group vitamins, and dietary fiber.
Only wheat can provide 20% of a person’s daily energy and fiber needs. In addition, the consumption of cereals has been proven to reduce the risk of cardiovascular and some oncological diseases. Other cereals such as barley, rye, rice, and corn have similar characteristics.
But cereal crops are not only used as food for humans – only 55% of the total volume is consumed by humans. Another 36% goes to feed animals, and the remaining 9% is used to produce biofuels (the feasibility of which, however, has been debated for many years).
That is, grains really do have great importance – and any instability in this market becomes a global problem. Until recently, the 2007-2008 crisis was considered the largest food crisis in the last 40 years. During that time, against the backdrop of climate anomalies and rising prices, the cost of rice doubled, and wheat prices soared by 136%.
The consequences of this were observed for several years: hunger riots took place in more than 40 countries, including Algeria, Syria, and Iraq. In Egypt, Libya, and Tunisia, they even led to revolutions. And the International Panel of Experts on Sustainable Food Systems (IPES-Food) believes that we are still feeling the effects of that crisis to this day.
The current food crisis has already beaten the anti-record of 2007-2008. According to IPES-Food’s estimation, a new threat is emerging from the same factors as 15 years ago.
Here they are:
- dependency of the poorest countries on imports;
- Climate change, which negatively impacts crop yields.
- Military conflicts that deplete resources and affect markets of different countries.
- Increase in fertilizer prices.
Therefore, experts from the UN Food and Agriculture Organization are now giving the same recommendations as before. In particular, they suggest not to restrict global trade in food and mineral fertilizers (that is, not to impose any restrictions on anyone’s exports), to diversify sources of food (countries should not purchase everything from one country), and to avoid ill-considered political decisions.
However, all these mistakes made by governments of different countries continue to shock the market with loud statements, as well as with new prohibitions, tariffs and quotas.
There is another factor – the coronavirus, but the global supply system has shown relatively stable performance in the face of it. It has weathered the “pandemic” years of 2020 and 2021 far better than the crisis of 2007-2008.
However, difficulties gradually accumulated. And this can easily be traced through the growth of the food price index. By 2020, they had dropped to pre-crisis levels in 2007, but in 2021 – after an abnormally hot summer that hit crops in many regions – the index began to rise again. In January 2022, it reached a record high, and in February – just before the start of the war – it added a few more points. And after February 24, the increase in wheat prices exceeded 75%, and corn reached 30%.
That is to say, the crisis began even before the war. But it was the war that accelerated the process to such an extent that there was practically no space left to solve this serious global problem.
Is it really possible that there might not be enough wheat and corn for everyone?
The situation is more complicated. The thing is that the grain market has an important feature – inelastic demand. That is, demand that does not depend on the volume or quality of supply.
On the one hand, it’s good: no matter how much grain there is, it will be bought. But this is also associated with the instability of such markets. A 5% decrease in supply can cause prices to rise by 20-30% (as previous crises have shown). This is how the market for essential goods works – any instability on it drives up prices, even the slightest.
And the concern here is not even the real grain shortage. After all, there is enough of it produced in quantitative terms, and in case of a crop failure there are always stocks for at least 10-20 weeks. The problem is the prices themselves. For developed countries, a 20-30% increase is certainly unpleasant, but overall tolerable. However, it is absolutely critical for developing countries such as Bangladesh, Tunisia, Lebanon, Pakistan, Yemen, and Sub-Saharan African countries. States where the problem of hunger is already very acute simply cannot afford to buy grain at such prices.
Now, besides the fact that part of the grain is blocked in Ukrainian ports, it is unclear what will happen with the new harvest (which has not yet been collected) and with the next sowing (fields are mined, infrastructure and equipment are destroyed, many farmers are abroad or on the front line).
“The spring sowing season has gone much better than initial expectations. This was largely helped by Russia withdrawing troops from under Kiev and northern regions in March. However, it is not very clear what will happen with the harvest. The question applies both to the northern part of the country, where corn is sown, and to the southern belt around the Black Sea, the main wheat production region. How it will be harvested and by whom is an open question. This worries the global market,” explains Andrey Sizov, Director of the analytical center “SovEcon”.
The market and the sowing campaign for the harvest of 2023 are causing concern. “This is the south of Ukraine, these are winter crops that begin to be sown in late summer – early autumn. How will Ukrainian farmers feel at this time and will they have money for this sowing? After all, the farmer has to buy everything, bring out the equipment – and do everything well in advance,” the expert continues.
It turns out that only war is capable of destabilizing the market for a long time. But at the same time, there are other processes happening. Grain disappears due to local crop failures around the world: droughts, floods, cold spells and scorching heat this spring destroyed part of the harvest in the United States, France and India (all three countries are among the top 10 exporters of wheat in the world).
Against this alarming background, the market is stirring with statements about the suspension of exports, even from not the largest players, such as India. Due to military actions in the waters, the costs of insuring dry cargo and freight are increasing. Nitrogen fertilizers are becoming more expensive, for the production of which a natural gas, the price of which is rising, is needed. Some countries, fearing a shortage, begin to buy more in advance, which only exacerbates the tension.
This is enough to understand that the food market can hardly bear such a burden. The problem is that this is far from all. The threat of global hunger is a complex issue and it has several not so obvious causes. Here are the factors that are not directly related to grain production but also contribute to the problem.
- La Niña
According to the World Meteorological Organization, for the second year in a row, the phenomenon of La Niña is observed in the world. This Spanish word (which means “little girl”) refers to the natural cooling of the surface of the Pacific Ocean due to trade winds. They push the heated surface layer of water away from the coasts of Peru and Chile, resulting in cold water rising from the ocean depths to the surface. While scientists do not fully understand how La Niña affects air temperature, there is a direct correlation between it and the amount of precipitation. In 2021, this natural phenomenon caused dry weather in the eastern part of Russia and Kazakhstan. And in 2022, it caused drought in the area around the Horn of Africa, the southern prairies of Canada, the United States, and the south of South America. In addition, it was La Niña that triggered unprecedented rainfall, which led to crop flooding in Southeast Asia and Australia.
- The gauge width of Ukrainian railways.
In different countries around the world, the gauge width of railways differs: in the countries of the former USSR, including Ukraine, it is 1520 millimeters, while in Europe it is 1435. There are several ways to connect trains when they switch to another gauge: for example, Spanish high-speed trains Talgo do it on the move at a speed of up to 15 km/h. Others have to completely rearrange the wagon trucks (this is the base with wheels without a body), which takes time. These temporary costs are important. Since the seaports of Ukraine are blocked, the only way to export grain and oil crops to Europe is by rail. Thus, logistics costs have increased by 15-20%, as maritime container ships can accommodate incomparably larger volumes of cargo than any multi-car train (for comparison: in May, Ukraine was able to export 1.3 million tons of grain by train, while by sea it shipped 7 million tons in the same period). Ukrainian freight trains at the borders with Poland, Romania, Slovakia, and Hungary are forced to fully reload grain into European wagons due to the difference in gauge width – and this further delays the process.
In 2021, the Taliban seized power in Afghanistan. Their arrival triggered a powerful humanitarian crisis, and the economy practically collapsed. The annual wheat production volume in Afghanistan has remained at 4 million tonnes in recent years, and it is unknown whether the plan will be fulfilled this year. Against this background, the Taliban government imposed a ban on wheat exports to ensure food security within the country, where 97% of the population suffers from food shortages. This ban announcement followed India’s similar decision, which was criticized, and the market responded with an immediate 6% increase in wheat prices. Each new country that introduces such restrictions provokes a new price surge, even if it is not a significant player in the global food market.
- Sanctions against Belarus
Growing agricultural crops on the same soil depletes it, so obtaining a harvest without fertilizers becomes increasingly difficult over time. Prior to the war, Russia and Belarus were the largest suppliers of mineral fertilizers in Europe. And even before the invasion, fertilizers became significantly more expensive: nitrogen fertilizers due to the surge in natural gas prices (this is the main ingredient in nitrogen fertilizers), and potassium fertilizers due to sanctions against Belarus (which provided 20% of the world’s total exports). In addition, Russian fertilizer exports were suspended until April to avoid shortages in the domestic market. All of these restrictions will somehow affect the shortage of grain and its price increase: starting from 2021, farmers are changing their planting plans, for example, replacing corn with soybeans, which require less fertilizers.
How many starving people are there, according to calculations?
The Food and Agriculture Organization of the United Nations (FAO) is responsible for counting the number of starving people in the world. For this, its experts select adult respondents from a representative sample in 153 UN member states.
Every year these people answer eight questions of a special scale. The answers are evaluated separately for each country, but for clarity, they are summed up. The last study was conducted in 2021, when 200 million people in 53 countries were recognized as hungry.
FAO combines three types of food deficit with the term “hunger”. The first one, actual hunger, is characterized by a lack of calories, i.e. energy. The second one, malnutrition, is characterized by a lack of essential nutrients (people who are malnourished do not necessarily go hungry, as there may be enough calories in their diet). The third one, lack of food security, describes a situation where people lose the ability to eat adequately and regularly (e.g. during times of armed conflict).
The figures for 2021 are known: 42 million people were on the brink of starvation, about 270 million people were expected to face food shortages by the end of the year, and every third person on the planet was undernourished.
There are also other instruments, such as the Global Hunger Index (GHI), which is calculated separately for each country. The authors of the GHI, unlike the FAO, are independent private organizations Welthungerhilfe from Germany and Concern Worldwide from Ireland. This index is more complex and multidimensional, taking into account indicators of national, regional and global hunger. The report usually presents an interactive world map where countries with increased and high risk of hunger are highlighted in color.
The number of people experiencing hunger can also be evaluated by the level of income – after all, people below the poverty line face at least one of the deficiencies listed. For example, in 2021, the majority of people in sub-Saharan Africa lived in conditions of extreme poverty – that is, less than $1.9 a day.
How the war in Ukraine caused another war – the grain war (and why it is advantageous for Russia)?
Russia is trying to use the threat of world hunger to its advantage in order to make the West at least partially lift sanctions.
At the end of May, Deputy Head of the Russian Foreign Ministry Andrey Rudenko stated that the solution to the ongoing food crisis is “very simple”. It is necessary to “lift all restrictive measures that have been introduced against Russian exports.”
At the same time, Russian federal channels threaten to cause a “real famine” in Europe. And Russian President Vladimir Putin boasts of record harvests supposedly expected in the country this year – claiming that “we will have 130 million plus tons” of grain. This is comparable to the record set in 2017 when the country harvested over 134 million tons – the highest value in the history of Russia and the last years of the USSR.
Russian exports during a record harvest could indeed cover the global deficit and lower prices on the global market. However, Putin’s words are difficult to confirm or refute at this point: after the 2017 increase in crop yields, no further growth has been observed in the country, and no new records have been set.
While sources from the American publication Politico claim that there definitely won’t be an exchange of grain for the lifting of sanctions, the food crisis could still bring dividends to Russia, especially if the country manages to drag the situation out until mid-summer. This is the opinion of Ukrainian political analyst Igor Tyszkiewicz for example. “The Kremlin hopes to wait until mid-summer, possibly creating a few more crisis points. And attempt to exchange concessions on secondary issues (but important for the EU and the US) for more favorable conditions on key issues,” he argues.
By the way, there is currently a quota in Russia – until August 1st, the country can export no more than 8 million tons of wheat. It is currently unknown whether the quota will be reinstated and in what volume. However, Elena Tyurina, the director of the analytical department of the Russian Grain Union, is already hoping to increase exports of Russian wheat through Africa.
Although Russian wheat is increasing in price, it is still cheaper and of better quality than German and French wheat, which makes it more attractive to buyers. In other words, it is actually beneficial for the Kremlin to increase wheat exports, which is a good opportunity to replenish the budget in conditions when the prolonged war requires more and more expenses.
However, it is worth remembering that the next agricultural year will already be under sanctions. Arkadiy Zlochevsky, the President of the Russian Grain Union, draws attention to the rise in prices for absolutely all resources for sowing: “Plant protection products have risen in price by at least 20%, repair and maintenance of equipment have increased by one and a half to two times, mineral fertilizers, electricity, and fuel and lubricants have also increased in price.”
According to Zlochevsky, the costs of sowing will increase by at least 20-30%. Against this backdrop (as well as in conditions of increasing export duties), farmers find themselves in a situation where it becomes simply unprofitable to continue working. Therefore, in the coming years, Russian agriculture risks losing a significant number of players.
As for the crop in Ukraine, there are still “very high reserves” from the record-breaking 2021 harvest, says Andrey Sizov, Director of the analytical center “SovEcon”. If the new crop is also harvested successfully, domestic grain supply in Ukraine will exceed consumption by about three times. With closed ports, this will lead to a complete collapse of the domestic Ukrainian market: price collapse, farmer income decline, and increase in the cost of production (since all material and technical resources for agriculture have significantly increased in price).
“This is a severe blow to the business of farmers, who are already in a difficult situation, especially in regions that have been directly affected by military actions,” warns the expert.
If the war drags on (and it seems to really be dragging on), Ukraine will be unable to ensure exports and conduct winter wheat sowing for the 2023 harvest. This is a bad scenario, says Sizov, and as a result, there will be a new rise in wheat prices worldwide, an even greater number of people starving on the planet, which will continue to grow “at an accelerated pace”.
“There are literally only three months left before the sowing of winter crops,” reminds Sizov. And he immediately gives new reasons to worry: “How else can we make the situation worse? Inflict serious damage to the grain terminal. While the main terminals have not been damaged, a rocket has already hit the large terminal in Nikolaev, causing a decent fire. Against this background, the global market grew on the next Monday.”
However, all of these possible consequences pale in comparison to the ones that await the world if Russia truly unleashes its “bread weapon” to its fullest potential. This scenario, according to Andrey Sizov, is called “extremely bad.”
According to him, Russia will limit exports to the West in order to make them abandon sanctions. At first, this will not heavily impact the West, but it will greatly affect the poorest countries in the world, including Middle and Near Eastern states. The food crisis in these countries will worsen significantly, which may not only lead to hunger riots and state coups, but also provoke a flow of refugees to Europe.
So the war in Ukraine is escalating into a grain war between Russia and the rest of the world – not just with “unfriendly” countries. This is very bad for the global market, says Sizov, but the Russian market will also suffer: prices will collapse, and tens of millions of tons of grain will be lost.
So far, the “extremely bad” scenario does not appear to be the main one, but its probability is increasing. The Kremlin is becoming increasingly insistent that, in order to supply Russian grain to international markets, the West will have to abandon sanctions.
Recently, President Putin’s Press Secretary, Dmitry Peskov, announced that “there have been no substantive discussions” about lifting sanctions. It seems that the threat of world hunger will not only provide a good reason for Russia to start such discussions, but will also become Moscow’s main trump card in them.
Meanwhile the crisis is worsening. According to FAO Deputy Director Maurizio Martina, grain prices have already risen so much that every percentage increase in the price of wheat pushes about 10 million people below the poverty line on the planet.