News

Report: War in Ukraine leads to global food security and price crisis

The war in Ukraine has resulted in a reduction in spring crop planting by at least one third and heavily disrupted supply routes, according to a report by the International Panel of Experts on Sustainable Food Systems. 

As a result, not only is the Ukrainian population facing dire food security threats but the ​​global agri-food markets are disrupted due to export restrictions, shortages and panic buying. While wealthier countries are experiencing the stresses on the global market in terms of spikes in food prices, poorer nations are seeing an exacerbation of pre-existing struggles with hunger.

Lack of access to food can lead to destabilised global conditions

Wheat, corn and sunflower oil are some of the major commodities that Ukraine and Russia produce. Ukraine alone is responsible for 14% of global corn exports, 15% of barley exports, 51% of sunflower-based vegetable exports and 14% of rapeseed oil exports. According to the International Panel of Experts on Sustainable Food Systems (IPES), over 30 countries depend on a combination of Russian and Ukrainian exports for at least 30% of their wheat import needs. Of that group, some 20 countries source over 50% of wheat imports from these markets.

The magnitude of these export bans has been emphasized by food export bans from countries including Indonesia, Hungary, Moldova, Serbia and Argentina. These bans further limit the sourcing opportunities for countries that are dependent on food imports.

In the past, food crises have sparked riots. Although such a response to the current climate is not so pronounced, there are minimal governmental safeguards to protect populations that are heavily dependent on staple food imports, according to the report. 

Even wealthy countries are suffering under steep prices

However, these export-dependent countries are not the only ones that will struggle. Across the board, IPES found wheat export prices rose 20% between February and March of this year, hitting a 14-year peak. Maize reached the highest price levels since records began. Global food price indexes reached the “highest levels ever” on April 8, according to data from the UN Food and Agriculture Organization (FAO).  

Part of the impetus driving such a sharp rise in prices is investors speculating on commodity futures. While supply disruptions are real, the report emphasized that “there is not a global food supply shortage at the present moment.”

The report pointed to speculators who buy and sell commodity futures contracts to make a profit as drivers behind this double-digit price growth. While future speculation provides liquidity to global commodity markets, excessive speculation can lead to swings in prices that are more pronounced than would have been the case based on supply and demand conditions alone. These futures prices eventually trickle down into real-world prices.

According to the report, this global destabilisation of food commodity markets is due to structural weaknesses in food systems. Pronounced reliance on fertilizer and fuel, as well as an interlinked system that does not prioritise local cropland, the cultivation of traditional, resilient crops or diversified food supplies has led to the current market where a conflict in one area can have consequences thousands of kilometres away.

Solutions to global food crises require structural changes

While the report noted the situation could deteriorate further if the ongoing war affects the summer harvesting of Ukrainian wheat, it did outline that fundamental change to our international food systems that encourage more self-sufficiency and reliance on local production could help avoid other future food crises. 

The report concluded: “failure to [make changes] means sleepwalking into the catastrophic and systematic food crises of the future”.