SYLLABUS SECTION: GS II (INTERNATIONAL ISSUES)
WHY IN THE NEWS?
Food and Agriculture Organization’s (FAO) THE UKRAINE WAR AND THE GLOBAL FOOD CRISIS price index for cereals and oils surged to its highest level since 1990.
REASONS FOR WORSENING THE FOOD CRISIS:
- Russia’s invasion of Ukraine and the subsequent sanctions on its economy have sent global food prices soaring.
- War is in its fourth month and is still raging in Ukraine’s east with no political solution on the horizon, the United Nations and Turkey have initiated talks with the Russian leadership to facilitate the exports of grains and fertilizers from Russia, and the Ukraine War and The Global Food Crisis.
- The blockade of Ukraine’s Black Sea ports is one of the reasons for rising prices.
- Western sanctions on Moscow are also one of the reasons.
- Russia is also a leading exporter of fertilizer, an essential commodity for food production. Russia and its ally Belarus together account for some 38% of potassic fertilizers, 17% of compound fertilizers, and 15% of nitrogenous fertilizers.
The targeted sanctions on Russian oligarchs have choked finances for the agricultural industry.
Food Crisis and Its Seriousness:
- Many countries were facing growing food insecurity even before Russia’s war.
- Climate shocks, conflicts, and the COVID19 pandemic had already disrupted supply chains, pumping up prices of both commodities and crops.
- The war in Ukraine has aggravated this situation.
- According to World Bank, The Agricultural Price Index was 40% higher compared to January 2021, in June.
- Maize and wheat prices rose 42% and 60%, respectively from the levels of January 2021.
- Global food, fuel, and fertilizer prices are projected to be sharply higher this year and will remain elevated into 2024, the Bank estimates.
- S is facing unacceptable levels of inflation.
- In the K., inflation numbers have already hit a 40-year high.
- Almost 90% of emerging markets and developing economies experienced food price inflation greater than 5% this year.
- Low income countries are the hardest hit. According to the UN World Food Programme (WFP), Ethiopia, Nigeria, South Sudan, and Yemen remain at ‘highest alert’ as hotspots with “catastrophic conditions”, as Afghanistan and Somalia are added to this category
How important are Russia and Ukraine for global food security?
- Russia and Ukraine together account for more than a quarter of the world’s wheat supplies
- Russia’s share in the global exports of wheat is some 20%
- Ukraine’s share in the global exports of wheat is some 8%.
- Ukraine is the world’s eighth-largest producer and fourth-largest exporter of corn, accounting for 16% of global exports.
- Ukraine, which produces up to 46% of sunflower seed and safflower oil is the world’s largest exporter of sunflower oil.
- About 50 countries depend on Russia and Ukraine for more than 30% of their wheat imports, according to the FAO.
- Azerbaijan and Georgia source more than 80% of their imported wheat from Russia and Ukraine, Turkey, Egypt, Bangladesh, and Lebanon meet over 60% of their imports from these two countries.
- Russia has suggested that it would resume exports (not sure whether Ukrainian or Russian grains) from the ports on the Sea of Azov that it controls (Mariupol and Berdyansk).
- Russia also said that it would open a corridor for commercial vessels in the Black Sea if Ukraine demines the ports it controls (mainly Odesa and Mykolaiv).
These proposals, which were discussed in Ankara, could be implemented only as part of a deal between Moscow and Kyiv, s Russia seeks sanctions relief in return for opening the maritime corridor.