The greatest shortage in history is coming!

The damage caused by Russia’s invasion of Ukraine to global food supply chains appears to be greater than feared.

Besides drought, the Food and Agriculture Organization of the United Nations (FAO) warns: There is an urgent need for meaningful humanitarian action to save lives and livelihoods in 20 hunger hotspots because the global food crisis has begun.

In addition, India has decided to suspend its wheat exports indefinitely. The move is aimed at ensuring national food security, although gaps remain in some countries. This decision is also the result of a heat wave in India which would cause more than 15% of the crop to be lost. Just a few weeks ago, countries like India were counted on to help alleviate global food shortages.

Javier Blas, a Bloomberg columnist specializing in energy and commodities, comments:

What worries me most is the counterfeit effect of the Indian wheat export ban. Not just for wheat (and corn), but especially for rice. If rice exporters panic (and there’s no reason for that, thanks to an expected record harvest) and follow suit, global food security is over.

A perfect storm?

Globally, commodity prices have already risen by 23% in one year, clearly due to the fallout from greed and money printing. No immediate change appears to be in sight.

Indeed, Abdolreza Abbassian, former head of agricultural markets at FAO warns: The real danger lies in the 2022-2023 season, and this will lead to the downfall of governments.

Before the war, Ukraine supplied 11% of wheat, 15% of barley, 17% of corn, and 46% of sunflower and safflower seeds worldwide, so supermarkets in France, the UK and elsewhere were already limiting sales of oils botanical; About 30% of Ukrainian land is currently occupied, and it is too unsafe or too damaged to be cultivated, which is a huge challenge.

In addition, China is stockpiling more crops than usual, export restrictions on Argentine beef and Russian fertilizer have been imposed, and countries such as Kazakhstan and Serbia have already imposed similar restrictions before the conflict.

The role of European policies in combating deforestation

Another important development is Indonesia’s decision to stop exporting palm oil, a critical component of the global food chain. The European Union plans to impose new, far-reaching restrictions on the import of palm oil. This decision was motivated by the desire to combat deforestation.

However, the EU’s approach is questionable. 84% of global palm oil production occurs in Indonesia and Malaysia. The independent World Resources Institute recently identified Indonesia and Malaysia as forest hotspots. Clearly, deforestation is a problem, but according to the Food and Agriculture Organization, it is not as much a problem in Asia as it is in Africa and South America.

A better and more targeted approach, suggests the World Wide Fund for Nature (WWF), would be to support sustainable palm oil and avoid boycotts, because we know that alternatives to other vegetable oils can cause greater environmental and social damage.

In Malaysia, which fortunately, unlike Indonesia, continues to export palm oil, 90% of its production benefits from the sustainability label, so everything is fine in this aspect.

In this regard, it is also worth noting that palm oil has a high yield compared to alternatives. For example, a study published by Nature clearly shows that to meet global demand, palm oil production would need to expand to only 36 million hectares of additional land, compared to 204 million hectares for soybeans. In other words, the EU’s approach appears to need to be rethought.

The biggest food crisis in history?

A new expert report from the International Panel on Sustainable Food Systems predicts that the new global food crisis may be the largest in history. David Beasley, director of the United Nations World Food Program, has been warning for weeks about the impact of the war on global food production.

Just this week he said about the Russian naval blockade of Ukraine:

The longer the ports in the Odessa region remain closed, the more devastating this global food crisis will be. Are we asking too much to allow food to flow so that millions of people can eat?

As a result, he adds, Europe may soon begin to worry about larger migration flows from Africa.

The European Union is currently trying to help bring food from Ukraine by road and rail, but it’s not easy.

Countries like Brazil are currently providing assistance, but Brazilian agro-industry imports more than a quarter of its fertilizer from Russia and Belarus, which are already subject to export restrictions.

European officials fear that Russian President Vladimir Putin is using food supplies as an economic weapon, by planning to impose export restrictions on agri-food products, fertilizers and energy.

However, food prices are already rising in Western Europe by about 10% annually.

Food is only a small part of a family’s budget, so it won’t lead to food riots like the Arab Spring, but it will mean a drop in quality of life for many.

The question is what can be done immediately to rectify this situation. One of the most important things we can do is to avoid imposing more condescending behavior on our farmers. In this sense, it is good that the German Green Agriculture Minister is asking the European Commission to postpone the new regulation on crop rotation.

global food crisis

In France, the proposal of Senators Guillaume Chevrolet and Denis Saint-Pie to impose a carbon dioxide floor should be resisted, because energy costs also drive up food costs. In Belgium and the Netherlands, policymakers must also reconsider their controversial nitrogen policies, which involve spending huge amounts of taxpayer money to shut down farms.

Much of this is due to the European Union’s environmental regulations. On February 24, a new era began, and much of the EU’s regulatory approach was no longer relevant.

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