How did the conflict between Russia and Ukraine "tear" the global food system? Understand a text
2022-03-14
As we all know, Ukraine and Russia are both important food exporters in the world, and their wheat exports account for about one third of global exports. Therefore, as the conflict between the two countries intensifies, the global food system is facing unprecedented threats. In fact, since the outbreak of the conflict between Russia and Ukraine, the prices of some agricultural products, especially wheat, have continued to rise, and merchants and consumers in many countries have been impacted. Recently, the Ukrainian government imposed an export ban on wheat and other agricultural products, which further deepened the outside world's concerns about the global food crisis. The food and Agriculture Organization of the United Nations warned on Friday that if the food exports of Ukraine and Russia were blocked for a long time due to the conflict, the number of global malnutrition could increase from 8 million to 13 million. Qu Dongyu, director general of FAO, said in a communique, "the interruption of food and oilseed production, supply and transportation chains, as well as restrictions on Russian exports, will have a significant impact on food security. This is particularly true for about 50 countries that rely on wheat imports, 30% or more of which come from Russia and Ukraine." Egypt, Turkey, Bangladesh and Iran are the largest wheat importers, with more than 60% of their wheat purchased from Ukraine and Russia, while Lebanon, Tunisia, Yemen, Libya and Pakistan also rely heavily on these two countries for wheat supply, the report said. So in what ways will the crisis hit the global food system? Some analysts gave the following impacts: Rising food prices The conflict between Russia and Ukraine threatens the main crops in Europe's major food producing areas, which means that the rising food prices that have plagued consumers around the world may become worse, thus increasing the threat of a comprehensive hunger crisis. The United Nations has warned that global food prices, which have reached record highs, could soar another 22% as conflicts stifle trade and cut future harvests. Grain is the main source of food in the world, with wheat, corn and rice accounting for more than 40%. Higher transportation costs, energy inflation, extreme weather and labor shortages make food production more difficult. Meanwhile, according to the International Grains Council, grain stocks are facing a fifth consecutive year of decline. The current conflict will only further push up prices and bring the number of hungry people to unprecedented levels. It should be noted that global food prices have repeatedly hit record highs, and the United Nations benchmark food price index has soared by more than 40% in the past two years. An estimated 45 million people were on the verge of food insecurity during this period. The agricultural market is also soaring. Food trade protectionism Governments are taking steps to make food supplies more biased towards local households, which could prolong food inflation. Some countries such as Hungary, Indonesia and Argentina have set up trade barriers to the export of agricultural products such as wheat and edible oil to curb domestic prices and ensure local food supply. The conflict between Russia and Ukraine is undoubtedly another "heavy stroke" in this wave of protectionism. Steve, head of strategy at gro intelligence? Steve Mathews said that trade restrictions could lead to further increases in international prices due to tighter global supply. "This has greatly increased people's concerns about inflation," he said On the other hand, many countries that can usually make up for shortages also face production problems themselves. In Brazil, the main supplier of corn and soybeans, severe drought has withered crops. Last year, dry weather also withered farmland in Canada and parts of the United States. North American farmers may see current prices as a reason to increase planting in the coming weeks, but it will take months for these lands to harvest. Agricultural input Everything used to grow food is going up in price. Russia, a major supplier of fertilizer for all major crops, earlier this month urged domestic fertilizer producers to cut exports, raising concerns about a shortage of crop inputs crucial to growers. At a time when farmers in Brazil, the world's largest fertilizer importer, have difficulty obtaining the fertilizer needed for crops, Russia's recent move has added uncertainty to the global market. Russian President Vladimir Putin said that Russia will supply chemical fertilizer to countries with "friendly" relations with Russia, but first of all, ensure the supply of chemical fertilizer in the domestic market. Global fertilizer prices have been soaring due to supply disruptions and production difficulties. In Europe, the soaring price of natural gas, a key raw material for the production of nitrogen fertilizer, has forced some factories to cut production. The price of fuel used by farmers to heat barns and food production equipment is also soaring. "In the current high price environment, it will be difficult for farmers to obtain the credit needed to pay and / or purchase raw materials," said Alexis Maxwell, an analyst at Bloomberg green market. "Any food shortage has the risk of inhibiting food production and quality, increasing the pressure on food prices." Black Sea supply The conflict between Russia and Ukraine will initially confuse the world's wheat and vegetable oil supply, precisely because the ship traffic in the Azov Sea was interrupted for a time. The Black Sea is also a major fertilizer export market. This waterway crosses Russia and Ukraine and connects the Black Sea. Nevertheless, due to concerns about crew safety and insurance costs, ship owners are reluctant to send ships to Ukraine or Russia, and the flight ban also makes it difficult for Russian sailors to board their ships or return home. Ukraine and Russia together account for more than a quarter of global wheat trade and a fifth of corn sales. Buying boom Dealing with the dizzying rebound in agricultural markets is not easy, especially for countries that rely on foreign supplies. Concerns about rising sunflower oil prices have triggered a rush to buy in Turkey, and the shock wave has spread to store shelves. Even Indonesia, the world's largest exporter of edible oil, is under pressure: supermarkets limit each shopper to one box of edible oil, and many families line up with their young children to buy more edible oil. Concerns about food supplies are also growing in the world's two most populous countries, China and India. As the Chinese government pays more attention to food security, Chinese buyers are buying large quantities of American corn and soybeans to ensure supply. In India, the sharp rise in vegetable oil prices is deterring buyers, indicating that demand has been undermined, which has been warned by some banks and analysts. Matthew of gro intelligence said that if the food supply from the Black Sea continues to be cut off, the global agricultural trade will need greater transformation. "This adjustment will be painful, and the pain will be distributed in proportion to your food budget and your total income or wealth," he said (Xinhua News Agency)
Edit：Li Ling Responsible editor：Chen Jie
Source：CLS
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