The Russian-Ukrainian conflict and Western sanctions disrupted the supply of grains and vegetable oils, and global food prices hit new highs, with a monthly growth rate reaching the highest point in 14 years.
The Food and Agriculture Organization of the United Nations (hereinafter referred to as the Food and Agriculture Organization of the United Nations) pointed out that the food price index has hit record highs for three consecutive times this year, rising 12.6% in March from February and jumping 34% from the same period in 2021. The Russian-Ukrainian conflict "spreads shocks through the grain and vegetable oil markets," the group said.
Beth Beckdol, deputy director-general of the United Nations Food and Agriculture Organization, said: "The Russian-Ukrainian conflict has exacerbated people's concerns about food security, and we are experiencing an overall increase in food prices."
According to the United Nations Food and Agriculture Organization, 20% to 30% of Ukraine is planted. The region's winter cereals, corn and sunflower seeds are either not sown or harvested. The resulting gap between global food and feed supply and demand may increase international food prices by an additional 8% to 22% on the basis of already high levels.
World food crisis deepens The
World Bank has warned that rising food prices could cause lasting damage in low- and middle-income countries, pushing millions into poverty.
In developed countries, food spending accounts for about 17 percent of total consumer spending, but in developing countries it is much higher. In sub-Saharan Africa, for example, the rate is as high as 40 percent.
If food commodity shortages persist, the number of undernourished people globally could rise by between 8 million and 13 million, with the most pronounced increases in the Asia-Pacific region, followed by sub-Saharan Africa, the Near East and North Africa, the FAO said.
Egypt is the world's largest importer of wheat, and millions of people survive on subsidized bread made from Ukrainian grains.
Wheat buyers in Egypt usually buy large quantities of wheat from Russia and Ukraine, but in less than a week, buyers had to cancel orders from these two countries: one because of high pricing, and the other because of a lack of willingness to sell wheat. company of. The sharp rise in global wheat prices has made it difficult for Egypt to maintain bread prices at current subsidized levels.
It's not just Egypt that is affected. War-torn Syria recently announced that the government would cut spending and ration essential goods.
In Lebanon, which borders Syria, authorities are grappling with a possible wheat shortage crisis after an explosion at the Beirut port in 2020 destroyed the country's main grain silos. Ukrainian grain exports account for 60 percent of Lebanon's supply, and the Lebanese government is negotiating with the United States, India and Canada to find other sources.
In 2020, African countries imported $4 billion worth of agricultural products from Russia, about 90 percent of which was wheat, said Vandil Silobo, chief economist at the South African Agricultural Chamber.
In Southeast Asia, Ukraine was Indonesia's second-largest wheat supplier last year, supplying 26 percent of Indonesia's wheat consumption. Kassan Muri, head of research at the country's trade ministry, said the rise in noodle prices would harm low-income people.
In Europe, Ukraine supplies the EU with nearly 60 percent of maize and nearly half of the main grain needed for livestock feed. Russia provides 40 percent of the EU's natural gas and is also a major supplier of fertilizers, wheat and other staples. Spain is feeling the pinch on both sunflower oil and grains needed for the farming industry, which are used to feed some 55 million pigs.
Jaume Bernice, 58, raises 1,200 pigs in northeastern Spain. Pork products in Spain have been losing money due to high costs since October, Bernice said. In the first two days of the Russian-Ukrainian conflict, the price of grain used for animal feed rose 10 percent on the Spanish open market.
U.S. annual inflation has risen to 7.9 percent, the highest in 40 years, data from the U.S. Bureau of Labor Statistics recently showed, and the shock to oil and commodity markets from the Ukraine crisis is expected to add more cost pressures.
Consumers are becoming more price-sensitive, and they are shifting some products to private labels, a U.S. food industry executive said. More and more switching to cheaper items like ground beef instead of steak.
"I would have hoped things were getting better now, but it's not," said Steve Schwartz, head of purchasing at a supermarket, who was notified of a price increase from the bakery and beer company and expected further in the coming months. price increase.
Fertilizer prices have soared, and major grain-producing countries are "very hurt"
Global agricultural production has been affected by rising fuel and fertilizer prices. Russia is a major fertilizer exporter. In 2021, its export trade value of nitrogen, phosphorus and potassium fertilizers will all rank among the top three in the world, accounting for 15% to 20%. Exports are mainly to countries such as Brazil, the United States and India.
According to Bloomberg data, fertilizer prices have tripled in 2021 due to the outbreak, but they rose more than 40% to a record high in the month that the conflict broke out between Russia and Ukraine.
Nick Paulson, associate professor of agricultural economics at the University of Illinois, said: "It's not just the price of fertilizer that is worrying, but in some cases the actual availability of fertilizer, and the conflict directly affects the ability of ships to transport it."
Recently, the U.S. "Agricultural Economic Barometer" released by Purdue University showed that since February, U.S. farmers' confidence in agriculture has dropped to the lowest level since the beginning of the epidemic. The researchers surveyed more than 400 U.S. agricultural producers every month for nearly six years. They found that farmers were concerned about the impact of military conflict on their production costs. They believe this year will be worse than 2021 - with more than 90% expecting operating costs to increase by 20% or more this year and expect higher crop prices to not be enough to offset the cost hit.
North Dakota farmer Mark Birdsall estimates that the average farm in his state will pay $137,000 more for fertilizer than it did last spring. Farmers don't necessarily benefit from soaring grain prices.
Birdsall said he and other farmers in his state are trying to avoid the risk by shifting some of their land from wheat to crops that require less fertilizer, such as soybeans or peas.
In addition to high fertilizer prices, the price of diesel fuel used in farm machinery has soared to $5 a gallon in March. In addition, the Federal Reserve survey shows that farmland rents in most parts of the United States will increase by about 20% in 2021, putting a burden on farmers who rent the land.
Moreover, the United States has been plagued by dry weather since last year. U.S. domestic wheat inventories are at their lowest level in 14 years after last year's poor harvest, according to the U.S. Department of Agriculture. While 34.4 million acres of winter wheat were planted in the U.S. this year, drought conditions are worsening in major winter wheat-producing regions such as Kansas.
Illinois farmer Bruce Rodley said he is unlikely to increase winter wheat acreage next year because he wants to stick to a rotation that doesn't damage the soil, and because wheat prices are high, input costs are also higher. It's a "double-edged sword," Rodley said.
Brazil is the world's largest producer of coffee, soybeans and sugar, and the most dependent on imported fertilizers among the world's agricultural powers. About 85 percent of Brazil's fertilizers are imported, with about one-fifth of that coming from Russia. According to a report by the Russian state-owned news agency TASS on March 4, the Russian Trade Ministry has proposed a complete suspension of fertilizer exports.
The Wall Street Journal said that if Brazilian farmers had to spend more on fertilizers or could not produce as many crops, the cost of Brazilian agricultural products would likely rise, pushing up world food prices.
At the same time, Brazil is also an important producer of corn and beef. Higher grain prices increase animal feed costs, which are passed on to consumers, who have to pay more for things like meat and dairy.
Fertilizer industry analysts say the conflict between Russia and Ukraine and Western sanctions against Russia have increased the possibility of a chronic global supply shortage, which will further exacerbate global inflation and hunger for the poor.
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