The global food crisis is “imminent” according to the world trade organization. According to David Beasley, the head of the World Food Program (WFP), “today the conditions are worse” than in 2007-2008, at the time of the food riots. 50 million more people are at risk of starvation.
If the food crisis was already threatening the world before the Russian invasion of Ukraine, the latter accelerated the difficulties, by disrupting wheat exports from one of the largest suppliers on the planet. Ukraine was also on the way to becoming the third exporting country before the start of the war on 24 February. On this date, many States, particularly in North Africa, such as Egypt, turned to another country in the top three producers of the cereal: India. But the scorching heat wave, with temperatures approaching 50 degrees this spring, prompted the Indian state to review its priorities.
Blockade on Indian wheat
Faced with soaring wheat and flour prices – between 20 and 40% – due to the devastation suffered by farms under the effect of this extreme heat, on May 14, New Delhi decided to ban wheat exports. The measure accentuated the surge in prices, in a context of global agricultural crisis.
The country is indeed the world’s second largest producer of the cereal (110 million tonnes last year), but most of its production is intended for domestic consumption. This data allows the Indian government to put into perspective the effects of this embargo on world food.
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If the export contracts concluded before the decree can be honored, and that India will approve on a case-by-case basis export requests for other countries “in order to meet their needs”, the concern remains of size. “If everyone starts imposing such export restrictions or even closing markets, it will only worsen the crisis and it will also harm India and its farmers,” reacted the German Minister of Agriculture. Agriculture, Cem Özdemir, following a meeting with his counterparts held on the day of the Indian announcement.
And the sugar
Especially since India did not stop at wheat, but took a new measure on Tuesday, May 24: the limitation of sugar exports. The world’s second largest producer and exporter, after Brazil, has decided to cap sugar exports at 10 million tonnes for the marketing year which runs from October to September. This decision, which will come into effect on June 1, was taken “with a view to maintaining domestic availability and price stability during the sugar season”, the government said.
Sugar exports are nonetheless expected to hit a record high this marketing year, with contracts signed for around nine million tonnes, of which 7.8 million tonnes have already been shipped, he added.
More chicken exports in Malaysia
Several South Asian countries seem to have taken inspiration from the Indian decision. Faced with soaring prices, Malaysia halted chicken exports. It also intends to fight against a shortage on its national market. Malaysian Prime Minister Ismail Sabri Yaakob said on Monday (May 23) exports of some 3.6 million chickens per month would be halted from June 1, “until prices and supply stabilize”. .
“The government is concerned about the issue of rising prices and the current low supply of chicken which is hurting” Malaysians, he said in a statement. The small city-state of Singapore, which depends largely on its Malaysian neighbor for its food, immediately saw a risk for its supply. About a third of Singapore’s chicken imports came from Malaysia last year, according to the island’s food agency. Malaysia also exports chickens to Thailand, Japan and Hong Kong.
Indonesia temporary oil embargo
Another staple food: vegetable oil. While the prices of the latter have soared since the start of the Ukrainian conflict – cases of shortages have even been noticed in French supermarkets -, the market was further destabilized when Indonesia decided on April 28 to suspend its palm oil exports. The country accounts for around 60% of the world’s production of the product, of which a third is consumed on its national market. Its biggest export customers are India, China, the European Union and Pakistan.
Less than a month later, Jakarta announced, on May 19, the resumption of trade. “Given the supply and situation of cooking oil, and considering 17 million people employed in the palm oil sector (…), I have decided that cooking oil exports will be able to resume on Monday, May 23,” said the country’s President, Joko Widodo. “Even if exports resume, the government will strictly observe the situation to ensure that demand is met at an affordable price,” he warned.
The palm oil sector welcomed the news of the resumption of exports with relief, especially as storage capacities are approaching saturation. But the damage is done: when the Indonesian ban was announced, vegetable oil prices reached historic highs. Ukraine, which provided 50% of the world trade in sunflower oil, can no longer export because of the war.
Restrictions fueling the crisis
Faced with this situation, the Secretary General of the World Trade Organization called on Wednesday, May 25, to limit restrictions on food exports, at a time when the war in Ukraine is heightening fears for world food security. “We have 22 countries now with 41 food export restrictions or bans,” Ngozi Okonjo-Iweala said during a press briefing during the World Economic Forum meeting in Davos.
“We have 164 members, so now is not the time to panic yet,” she continued. But “let’s limit this, because we don’t want it to exacerbate and lead to price increases”, she said, also recalling that the rules of the WTO authorized this type of measure “for reasons of security”, but on condition that they are “temporary, transparent and proportionate”.
The World Bank also warned this month that rising food prices are already having “devastating effects on the poorest and most vulnerable”. It will devote, over the next 15 months, 12 billion dollars to new projects intended to respond to the food crisis in the world. Its president, David Malpass, recommends that countries make “concerted efforts” not only to increase the supply of energy and fertilizers, help farmers to increase plantings and crop yields, but also to “remove policies that block exports and imports (…) or encourage unnecessary storage”.