The FAO World Food Price Index hit a record high in real terms in March, surpassing the extremes of the commodity shock of the 1970s and the spiraling grain prices of 2010 to 2013, which triggered (but did not cause) the Arab Spring.
Global commodities are up 23% year-on-year. Prices could rise further and stay there. “The real danger is the 2022-2023 season, and it will bring down governments,” Abbassian said.
[Putin’s] The imperial misadventure likely left several hundred million people facing chronic malnutrition. Some will starve.
Ukraine normally supplies 11% of wheat traded globally, 15% of barley, 17% of corn and 46% of sunflower and safflower seeds, so supermarkets have imposed limits on vegetable oils in France, the United Kingdom and elsewhere. Ukraine and Russia together supply 12% of the total calories traded in the world.
The fate of Ukrainian farms is described in a report by the country’s agriculture ministry. About 30% of Ukrainian land is occupied, unsafe or too damaged to be planted. Russian forces left mines across Sumy and Chernihiv as they retreated.
They deliberately destroyed grain storage silos, fuel depots and farm machinery – or stole them where they could. A farmer said he tracked his missing Land Cruiser using GPS to Belarus.
The agricultural labor force fell from 500,000 to 200,000 partly due to conscription. Yields will have dropped due to fertilizer costs. Growers expect to reduce usage by 30-40%. Fuel is in critical shortage. Farmers often handed over reserves to help the army.
The New AG International report says that Ukraine would normally export 6-7 million tonnes of grain per month through Black Sea ports. These are blocked by the Black Sea Fleet. Stocks have quadrupled to 20 million tons and can no longer be stored.
Rapeseed will spoil if moisture levels exceed 10%. The domestic price of maize collapsed by 40%, discouraging farmers from planting. It’s a vicious circle.
Exports by train are slow because the railway gauge of Ukraine is incompatible with that of Poland. Grain passes through the Romanian port of Constanta. The department says it will take 18 to 24 months to clear the backlog. “Honestly, it’s a disaster,” was the verdict.
The Kremlin has twisted the knife again by militarizing fertilizer exports. It froze sales of ammonium nitrate abroad during the planting season, allegedly to help its own farmers. Russia accounts for 45% of global supply.
The fertilizer crisis is piling up problems around the world. The International Fertilizer Development Center said it will cut maize and rice yields in West Africa by a third this year.
The North American fertilizer index tracked by Green Markets has nearly quadrupled from pre-pandemic levels. Farmers move down the “fertilizer curve” by sacrificing production to maximize commercial return. Brazilian soybean giant SLC Agricola said it plans to cut its use by a quarter this year. Typically, this will reduce yields by 15%.
The immediate unknown is whether this year’s La Niña spoils the upcoming US and Canadian grain harvest. The effect so far has been to cause severe drought in the western agricultural belt and too much rain on the eastern side. The next six weeks will be crucial.
The biggest unknown is whether La Niña will last a third year, and if so, how much it might weaken with age. The risk is that it ruins yet another season of grain and seed production in Latin America. Southern Brazil lost 18% of its soybean crop last year due to drought.
So far, we have not seen a fatal rush for corn ethanol and biofuels to replace oil, diverting edible grains to transportation. But it’s hard to stem the tide with Brent at $110 a barrel and heading for $150 or more if the West succeeds in restricting Russian oil shipments to Asia with restrictions on shippers and insurers. The grain used to fill the fuel tank of an American SUV is enough to sustain a human being for a year.
Rich OECD countries can buy their way out of the food crisis, but only by outbidding poorer grain-importing countries – many having to buy dollarized world grains with heavily devalued currencies. “I don’t think it will be a terrible famine. It will be a silent crisis of undernourishment,” Abbassian said.
The poorest in FAO’s hunger hotspots can be pushed over the edge. Some 161 million people were already facing “acute food insecurity” last year. The figure will be much higher now. Some of the vulnerable states are conflict zones: the workforce in phase 4 “emergency” reaches 8.7 million in Afghanistan, 5.4 million in Congo (DRC), 5.1 million in Yemen or 4.3 million in Ethiopia .
Others are the eternal victims of bad government and bad luck. The proportion of acutely insecure people has doubled to 35% in Honduras over the past two years and reached 46% in Haiti.
Putin has a lot to answer. He may not match the 20th century famine figures of Stalin and Mao, but his imperial misadventure likely left several hundred million people facing chronic malnutrition. Some will starve.
Countries in the Global South that still refuse to condemn his actions out of reflexive anti-Western ideology might think about it.