Even before Russia invaded Ukraine, the global economy was suffering from the repercussions of several man-made conflicts, climate shocks, COVID-19 and rising costs — with devastating consequences for poor people in low-income and developing countries. The war in Ukraine — a major “breadbasket” for the world — is deepening these challenges on an unprecedented scale. In the immediate, swift and bold action is required by both wealthy and low-income nations to avert further humanitarian and economic catastrophe.
Looking forward, the international community should learn two key lessons from the Ukraine crisis. First, we live in an increasingly interconnected world and would be remiss if we ignored food insecurity and conflict challenges in any part of the globe as someone else’s problem. Secondly, it is critical for the international community to go beyond immediate stopgap measures; not only addressing the root causes of these challenges but also reexamining the agricultural and energy policies that underpin our global economy.
Russia’s War Deepens a Dire Picture
The latest food insecurity crisis spreading around the world is not happening in a vacuum. Amid the COVID pandemic, supply chain issues and soaring inflation, global food prices have been on the rise since mid-2020 and are now at an all-time high. In 36 countries, food inflation is at 15% or higher, causing major problems for poor families who spend upwards of 50% of their income on food. Sixty percent of low-income countries are at a high risk of or are already in debt distress, up from 30% in 2015. Fuel prices are at a seven-year high.
Global food markets are extremely concentrated, both in terms of supplies and reserves. Seven countries make up 86% of wheat exports, while three countries hold 68% of the world’s wheat reserves. The figures are similar when it comes to coarse grains, corn, rice and soybean. Russia and Ukraine supplied about 30% of the world's wheat and barley before the war. Thirty-six countries, including some of the world's most vulnerable and impoverished, relied on them for more than half of their wheat imports.
Such concentrated and thin markets mean that when crises like the war in Ukraine happen, the global supply of food can be derailed quickly, leading to high costs. For example, insurance premiums are skyrocketing for vessels operating in the Black Sea, which only further raises prices for staple foods. Many countries are turning to alternative sources, but there are cost increases associated with these maneuvers as well. Countries in Europe or the Middle East that relied on Russian or Ukrainian food imports now suddenly have to pivot to acquiring them from Canada or Australia, for example, which will be more expensive given the greater distance traveled. Shocks like the war in Ukraine put into stark relief that food insecurity challenges are not always related to availability issues. Rather, it’s a question of accessibility and affordability.
As the war drags on, already record levels of acute food insecurity are expected to sharply rise. In the 81 countries where the U.N. World Food Programme (WFP) works, acute hunger is projected to increase by an additional 47 million people, from 276 million to 323 million — this is a staggering 17% jump, with the steepest rises in sub-Saharan Africa.
What happens if we continue to go about business as usual?
The Cost of Inaction: The Case of Syria
We know that conflicts cast long shadows, particular when not addressed early — every dollar invested in prevention saves between $5 and $7 dollars once conflict ensues and deepens. The war in Syria offers important lessons about the need to act early and boldly.
When war erupted in 2011, most families elected to stay, confident in a swift end to the war. After being internally displaced several times, however, some finally made the decision to move to neighboring Lebanon, Jordan or Iraq, where they were generally welcomed by locals and financially supported by international aid agencies, including WFP, who could support each refugee at a cost of about 50 cents per day.
The tide began to turn in 2015, as aid coffers began to dry up and government leaders used refugees as a scapegoat for economic turmoil. As a result, those same refugees began to arrive on Europe’s shores, with approximately one million landing in Germany in 2015. For the next five years, the German government would spend about $25 billion every year in humanitarian support to Syrian refugees in their communities, or roughly $70 per person per day. When compared to the 50 cents needed per day to feed that individual in Jordan or Lebanon, the expense is astronomical.
The lesson is clear: don’t wait to invest resources until crises reach your own shores or borders. Doing so only means that more resources and political capital will have to be spent down the road.
What Can Be Done?
There is a general consensus about the need to address underlying causes but not on what that looks like. We must therefore direct our limited energy, resources and political capital toward establishing consensus on the solutions — and on taking quick and decisive action to begin implementing these solutions now.
As a conceptual first step, it’s time for us to dispel the myth of localized conflict — that our world is more interconnected than ever before is a fundamental reality of the 21st century. And while arguments in favor of drawbridges, disentanglement and domestic prioritization are attractive, they are also unrealistic. As we have seen time and time again — whether during the COVID-19 pandemic, Taliban takeover of Afghanistan, military coup in Myanmar, or war in Syria — crises that originate abroad always generate costs at home. To limit these financial, political and human costs, our only choice is to harness our collective energy to address the root causes of conflict before they spiral into catastrophe.
Of course, addressing the root causes of our current fuel and food crisis takes time, of which we have very little. In the short-term, wealthy nations such as the United States can take several important steps to prevent further economic deterioration and reduce the global humanitarian costs of the war in Ukraine. The United States holds the presidency of the U.N. Security Council this month and aims to tackle the soaring prices of food commodities. Here’s what Washington and the rest of the international community should focus on:
- Provide adequate humanitarian and other forms of assistance to the world’s most vulnerable. Price hikes caused by Russia’s military incursion will also be felt among humanitarian agencies, which were already severely hamstrung due to the global pandemic. Rising food, fuel and transport prices have increased the costs of humanitarian assistance, which means agencies have fewer resources to spend on essential goods and services such as food, water, agricultural supplies, sanitation and medical care — just as they’re needed most.
At WFP, for example, we project that our food procurement and transport costs will increase by about $71 million per month — a 44% rise compared to our pre-COVID-19 average monthly costs in 2019; to put this into perspective this amount is enough to feed 3.8 million people with a single food ration per day for a month. For an organization funded entirely by voluntary donations — and which was responsible for delivering life-saving aid to approximately 128 million people worldwide in 2021 — these price hikes force us to slash rations in communities already experiencing acute food insecurity.
The reality is that humanitarian needs are vastly outstripping available resources. We need $21.5 billion to assist 147 million people in 2022 but we face a funding gap of over 50 percent. To ensure these communities continue to receive the support they need to survive, the international community must mobilize the resources to deliver at-scale funding to humanitarian aid organizations. The Biden administration’s request and approval by Congress for an additional $40 billion aid package for Ukraine, including $5 billion to address global food insecurity, is clear evidence of the United States’ generosity and humanitarian leadership. It is critical that these resources swiftly reach the neediest — but also that other wealthy nations, including those in the Middle East, follow the example set by the United States and give generously and give now.
In addition to scaling up funding, donor countries should ensure that all trade in food, humanitarian supplies and vital products such as agricultural inputs, including fertilizer, are exempt from sanctions, export bans, extraordinary taxes and duties.
This also means making sure that poor countries have access to financing for food, fuel and fertilizer. Debt deferment initiatives introduced during COVID-19 need to continue to reduce the burden on struggling low-income economies.
- Keep trade flowing and minimize disruptions to supply chains. The war in Ukraine has severed key supply chains and added surging costs for beleaguered companies trying to move products around the world, which are then passed on to consumers. Keeping trade open for food, fuel and fertilizer is crucial to containing the increase in food insecurity both within Ukraine and globally. This includes safeguarding agricultural production and food supply chains more broadly, including the storage facilities and infrastructure to move foodstuffs, especially grains, out of the country. The blockade of Ukrainian ports must end immediately to ensure that food produced in Ukraine can flow freely to the rest of the world.
To prevent further disruption, the international community should continue to strengthen the capacity of the World Trade Organization (WTO) to cushion the effects of the war on global trade. For example, the WTO has a valuable role in reducing the barriers for companies to restructure their supply chains and for cargo carriers to adjust their transport routes, which helps to ensure that goods can reach countries where there is high demand.
- Disincentivize knee-jerk policy reactions, such as export restrictions and import subsidies. The world food crisis in 2007-08 taught us that export restrictions amid market volatility exacerbate food insecurity, as export restrictions in one country cause additional restrictions in others. In 2007, when Ukraine imposed a virtual export ban on wheat, barley, rye and corn to protect domestic prices, Russia and Kazakhstan followed. These trade restrictions caused wheat prices to nearly double in 2008, resulting in widespread shortages in several net food importing countries.
The latest data from the International Food Policy Research Institute’s food trade policy tracker show that, since the Ukraine invasion, 23 countries have imposed export restrictions on food. The current restrictions affect about 17.3% of total calories traded globally, up from 5.6% before the war. It is critical that WTO facilitates coordination between governments and encourages major countries holding reserves, such as China, India and the United States, to release grain stocks onto international markets. Such measures will help to prevent further price increases and protect fragile supply chains.
- Strengthen market transparency. To minimize the risks of price hikes due to speculation, governments should be transparent about the supply of stocks they are holding as well as their production estimates for key commodities. Luckily, we already have an effective tool for enhancing food market transparency: the Agricultural Market Information System (AMIS). Developed in response to global food price hikes in 2007-08 and 2010-11, AMIS provides a platform for policy coordination in international food markets during heightened uncertainty. As the conflict in Ukraine continues to plunge global food and energy markets into turmoil, the G-7 and individual member countries should seek to identify strategies for strengthening AMIS and ensuring the full power of this tool is harnessed.
As we emerge from today’s crisis and prepare for tomorrow’s, the international community must remain focused on mitigating the underlying drivers of food insecurity. Here is how that can be done:
- Encourage diversification of agricultural imports. One of the core drivers of today’s global food crisis is market concentration. Any significant drop in supplies from even one of top grain exporter can spell disaster for reliant importers.
Arguments in favor of self-sufficiency, or even autarky, are unrealistic when poor countries can spend less importing a good than producing that good themselves. However, countries can and should limit their dependence on single suppliers by sufficiently diversifying their imports. Instead of relying on Russia and Ukraine for most of their wheat, African countries should seek to strengthen trade relationships with other exporters, such as Romania, Bulgaria and Hungary. Therefore, when disaster strikes, they can still make ends meet.
- Ensure an affordable supply of fertilizer. A global shortage of nitrogen fertilizer is causing a price surge, prompting some farmers in Ukraine and elsewhere to alter their plans for next spring’s harvest. In Kenya, for example, the price of fertilizers increased by 70% between 2021 and 2022, contributing to a commensurate drop in crop production. The war in Ukraine has only exacerbated the issue. Without an affordable supply of fertilizer for the next planting season, we will face yet another global food crisis next year.
Ultimately, we must refashion our response to conflict and its consequences. You do not have to be a humanitarian motivated by idealism to do this or to understand why it is a vital national security interest for nations around the world. This is a matter of dollars and cents. War and its consequences — like food insecurity, supply chain disruptions or migration — are no longer localized. The global community is deeply intertwined and only becoming more so, which means a problem for one region can quickly escalate into a global crisis. Addressing the root causes of food insecurity is the only way forward if we are serious about getting ahead of the next hunger crisis.
Dr. Arif Husain is the chief economist at the U.N. World Food Programme.