QUESTION: Even before the war in Ukraine food insecurity was rising. What were the pre-existing drivers and how do the current increases in food price increase hunger?
ANSWER: Hunger has been rising for a number of years, well before the Ukraine crisis and well before COVID. The number of hungry people was already about 800 million in 2020, around 100 million more than the year before. This is partly because of the COVID-19 pandemic, but it¡¯s also because of the long-standing drivers of food insecurity such as conflicts, extreme weather events, and pests and diseases.
Conflicts are a big driver of acute food insecurity. Acute food insecurity is horrible because it really puts people at immediate risk. A staggering 388 million people across 42 countries experienced acute food insecurity in 2021, which is more than 5% higher than in 2020. So this is an issue we need to focus on right away.
Q: Which products are particularly affected by the war in Ukraine?
A: Commodities most affected by the conflict are wheat, to some extent maize, edible oils, and fertilizers. Wheat is the primary commodity affected by the war. Russia is the world¡¯s largest exporter of wheat, accounting for 18% - nearly 20% of global exports in 2021, while Ukraine accounts for a further 10%. They¡¯re not the largest producers of wheat -that's India and China - but they are the largest exporters. About 35% of the world¡¯s population relies on wheat as a primary staple in their diets, so it's a very significant shock.
About a week ago, the price of wheat on global markets was about 50% higher than in February and about 80% higher than a year ago. Maize prices also increased following the invasion, rising 25-30% above the February levels and about 37% year on year.
Other commodities such as rice are not affected for the moment ¨C which is quite different from the situation we had 14-15 years ago during the last food price crisis, so there is a little bit of good news there.
With shipping through the Black Sea at a stand-still and high global wheat prices, we can expect other countries to sell more wheat since stock levels are not bad, or to plant more wheat this spring and summer to make up for the shortfall if exports remained blocked. So the world is not facing a global wheat shortage overall. There is enough wheat on the planet. But the problem is that countries that were used to importing from Russia and Ukraine need to adjust. It will not be painless and it will be very costly.
The impact of the war on fertilizer costs and availability is also significant because it could translate into production problems for the next season ¨C across crops ¨C if yields crash because farmers can not access or afford fertilizer. Russia and Belarus account for 20% of global fertilizer exports. Fertilizer prices were already very high before the war, because of high oil prices, with the price of urea already tripling last year.
Q: Which countries and regions are most likely to be affected?
A: Countries with high wheat imports from Ukraine or Russia are at highest immediate risk, especially those that were still awaiting shipments for the second half of the year ¨C such as Egypt, Turkey, Bangladesh, and Iran, but also Lebanon, Tunisia, Yemen, Libya, and Pakistan. It¡¯s the countries in the region. Middle East and North Africa (MENA) countries depend on wheat from the Black Sea region for geographic reasons ¨C the ships only have to cross the Mediterranean. And wheat is a staple in that region¡¯s diets.
This also threatens humanitarian operations in MENA since the World Food Programme depends on this wheat. So, the compounding shock of the war in Ukraine may cause severe outcomes for vulnerable people in several countries if humanitarian and development assistance are not scaled up. Again and again, whenever we have a crisis, it is the poor who suffer the most.
Q. We¡¯ve seen some countries respond with export restrictions. Is that an effective strategy?
A: This is exactly the wrong thing to do. It¡¯s critical we have a conversation around how to keep the trade of food commodities open. If you want to support your own population, do it in a different way, but do not block the flow of food. It's tempting to restrict exports to avoid local shortages, but it has very, very detrimental implications as we saw when we went through the 2007, 2008 food price crisis. The trick is really to move food from places of surplus to places of need, and trade is crucial for that.
Q: So what should governments and the international community do to support those most at risk of food insecurity?
A: Countries of course need to act and react and put measures in place. In general, it¡¯s better to protect the purchasing power of the poorest households through well-targeted nutrition-sensitive social protection programs rather than maintaining prices artificially low for everyone. For instance, subsidizing bread across income levels is not only very expensive for governments, it¡¯s regressive, it encourages food waste and poor diets, and it can be very hard to repeal politically once a crisis is over. So supporting safety nets at a time of crisis is the right way to go.
The same caution applies to helping farmers access fertilizer: the knee-jerk reaction is to subsidize because fertilizer has become more expensive. But if subsidies are applied indiscriminately, it risks increasing demand and fertilizer prices worldwide and it doesn¡¯t help in the end. Removing input trade barriers, focusing on more efficient use of fertilizers, investing in biofertilizers, and repurposing public policies and expenditures to better support farmers are much better ways of doing this. In addition to avoiding export restrictions, what you do domestically is very important. We know now from a couple of decades of experience what works, what has a beneficial effect overall, and what doesn¡¯t work and should be avoided in a situation like this.
Q: What can countries do to strengthen food security and improve their resilience to such shocks?
A: It's very important that we don't just focus on the immediate crisis and short-term measures. Every country going forward needs to continue to transform its food system and make it more resilient in the long term. It¡¯s really crucial to stay that course. Food systems were already reeling from multiple crises prior to Russia¡¯s invasion of Ukraine. Governments, private businesses, and international partners need to work toward more productive, resource-efficient, diverse, and nutritious production systems to ensure food and nutrition security is there in the face of rising climate, conflict, and economic risks. We can¡¯t keep our eyes off the medium to long term.
Public spending on agriculture is in the order of three quarters of a trillion dollars a year. And a lot of that money is not helping. It needs to be redirected in a way that actually achieves those more resilient, more nutritious and less climate-damaging outcomes. Mobilizing private funding and investing in innovation and research and development will be key, because everyone needs to ¡°do more with less¡±: produce more nutritious, more diverse and more high-value food for a growing population - and to do so with less water and less fertilizer, while limiting land use change and greenhouse gas emissions. (Climate-smart agriculture is the word to remember here.) Research suggests that investing in stronger food systems is also an investment in peace. This must be clear to everyone: If food systems are wobbly like they are in many countries right now, it leads to conflict, it leads to migration.
Q: Have countries reached out to the World Bank Group for help and what kind of support is being offered in the area of food security?
A: Yes, definitely we¡¯ve been in touch with a number of countries and demands are ramping up. Since the beginning of the pandemic, we¡¯ve responded with a whole set of emergency financing and new projects, and we expect to do more with this additional shock. In the last two years, the World Bank has provided about $17 billion annually in combined IDA/ IBRD lending. This is up from about $12 billion on average in the previous three years, primarily for agriculture and social protection measures. In the last couple of years, we¡¯ve allocated about half a billion dollars across 11 countries from the Crisis Response Window. There will be a lot more coming. Let¡¯s be clear: this is not the last crisis we will be facing. So whatever we do, we need to immediately help those who are in acute need but we should never take our eyes off the much deeper and much more fundamental issues that we need to address through our support and our programs.
