Confronting the Global Food Crisis Worsen by Russia's Invasion: Caitlin Welsh / Director of Global Food Security Program, Center for Strategic and International Studies (CSIS)

Hello and welcome to DEEPER LOOK from New York.

I'm Del Irani, it's great to have your company.

Over the past few months, we've focused on how Russia's invasion of Ukraine has been affecting those two countries...

But don't be fooled, this conflict is having a global impact...

specifically, on food prices.

Russia and Ukraine are major exporters of essential foods like wheat and grains.

And since the conflict began in February this year, the price of wheat has risen to record highs...

causing hunger to worsen in several countries.

"There is enough food for everyone in the world.

The issue is distribution, and it is deeply linked to the war in Ukraine."

So how much worse is this global food crisis going to get and what can be done to mitigate its impact on the world?

Joining me now to talk more about this is Caitlin Welsh.

She's the director of the Global Food Security Program at the Center for Strategic and International Studies.

She provides insight and policy solutions to global food security challenges, and has served in the White House and the US State Department in this role for over a decade.

Caitlin Welsh, welcome to the program.

Great to have you with us.

Thanks so much for having me.

So, Caitlin, I was just mentioning that Ukraine is of course a major global exporter of wheat and corn.

Put it in a bit of perspective, how has this current conflict between Ukraine and Russia impacted global food prices?

Thanks. That's a really important question.

I'll get into the multitude of ways that this war has affected global agriculture markets.

We're seeing some important food price increases.

When it comes to wheat, for example, with Ukraine and Russia supplying up to a third of the global export market for wheat, at least prior to the war.

Wheat prices have surged at least 60% since the beginning of this year.

Some types of wheat— their price has reached at least a 14-year high.

So, the price of wheat has surged.

We've seen record prices for sunflower oil.

It's also affected the global market for substitute products, and those mainly come in the form of substitute vegetable oil, substitute cooking oils,

like canola oil and soybean oil, for example.

And finally, this war has affected markets for fertilizers.

So, by which I mean that it's affected future agricultural production, with Russia and Belarus being major sources of multiple types of fertilizers.

So, all this to say that this war leaves very few agricultural markets untouched, and has effects on agricultural productivity and food security around the world.

And Caitlin, of course, with the ongoing fighting and conflict, Ukraine's agricultural lands and production facilities have been severely damaged.

What could be the longer-term effect on food prices and agricultural production?

Yeah. At least in the medium term, what we expect is a reduction in exports from Ukraine.

And this is due to a very, very deliberate targeting by Russia of Ukraine's agriculture sector.

We were seeing evidence of this from the very beginning of this war.

And now evidence is so abundant that it's very clear that targeting Ukraine's agriculture sector is one of Russia's principal aims when it comes to its attack on Ukraine.

We've seen imagery of attacks, again, on all aspects of Ukraine's food systems, from fields where landmines have been placed, or there are craters due to shelling of fields, farm equipment that's been destroyed.

We've seen dairy farms, for example, their warehouses had been destroyed.

Food warehouses have been attacked.

Transportation methods have been destroyed as well.

So, for example, railroads that are important for movement of grain within Ukraine and out of Ukraine's ports have been destroyed, and also attacks on ports themselves.

Ukraine's ports on the Black Sea are central to its agricultural markets, to its agricultural industry.

All of Ukraine's agriculture sector is oriented so that production can flow southward.

And exports can move south out of Ukraine's ports.

Without access to those ports, Ukraine is able to export only about half of what it was able to export this time last year.

So, blocking those ports has a significant impact on the supply of grains moving out of Ukraine right now.

Now, one thing you mentioned earlier is Russia is also one of the world's leading exporters of fertilizer.

And we've seen the price of fertilizer having risen sharply as a result of this conflict.

Can you tell us like what is the knock-on effect of the price of fertilizer being so high, effecting other grains, other crops and food prices in general?

The knock-on effects that we're seeing are very widespread.

You're seeing countries like Brazil.

Brazil is the world's major importer of fertilizer.

And it's needing to shift its sources of certain kinds of fertilizer.

Very early in the war, we were seeing reports that Brazil was shifting its import sources to Canada for some types of fertilizer.

Also, in the United States, the high price of fertilizer is affecting plans for our own farming.

Last month, we saw that US farmers were planning to plant a record high amount of soybeans.

And soybeans use relatively little fertilizer compared to other crops.

And one of the record low amounts of wheat, the fifth lowest amount in the past 100 years.

Wheat being a crop that relies relatively more on fertilizer.

So, you see even American farmers shifting toward crops that use less fertilizer.

So those are two examples of major global agricultural producers.

What we see in low, and, middle-income countries is that fertilizer will be even more difficult to obtain.

Meaning that farmers will need to go into debt to purchase it, will pass on higher prices to consumers, or won't use fertilizer.

Meaning that their productivity will be lower than it would be otherwise.

So, very important effects across the range of agricultural producers around the world.

UN Secretary General Antonio Guterres said, "There is enough food for everyone in the world."

But given, I guess, the pressure that we're seeing on food distribution, and we're seeing food prices rising, inflation up high, because of this, is there really food enough for everyone?

I mean, can so many people in so many parts of the world can't afford it?

Based on recent estimates of supply and production levels, there is enough food to go around.

But the question is more about the movement and the shifting of markets and the nimbleness of markets to move supply from where it is to where it's needed.

And so, there's time and costs involved in moving— Let's say, a country is planning to import from one region and then it needs to shift to import,

to sourcing from another country, for example.

So, there are tie-up costs involved there.

And also, I want to mention that markets, of course, are dynamic.

Where earlier on in this war, India was for the first time exporting its wheat on to global markets, because it was able to fetch a higher price on global markets than it could internally through government subsidized prices.

India, as you know, has recently imposed some export restrictions risk limiting its mount of wheat on global markets.

So, all this to say is that things are shifting.

As of last week, about 20 countries had in place some types of export restriction.

Not just on wheat, but on a number of different products relating to this conflict.

And then in another case, in the case of Ukraine also, making sure we can get the current harvest out of the ground, and grains that are sitting in silos onto global markets.

So, Caitlin, which countries in particular are the most affected by soaring food prices?

And just how severe is the impact on them?

Yeah, I'll answer this question in a few ways.

We're seeing impacts, of course on countries that rely most on the Black Sea for their agricultural imports.

And again, these tend to be countries that are in the geographic vicinity of Russia and Ukraine.

A lot of them being in the Middle East and North Africa.

Which source a significant proportion of their wheat in particular, from Russia and Ukraine.

Countries are affected in very different ways.

For example, you have a country like Egypt, which consumes per capita, twice the amount of bread compared to the rest of the world.

And spends a significant amount of its national budget to subsidize the price of imported wheat, and for its own social safety net program.

So, this higher price of wheat is going to have an impact on Egypt's budget.

When you look at countries like, a country like Yemen, with a pre-existing humanitarian crisis and very little ability to produce its own products.

Of course, this is going to affect a country like Yemen, because this war is also increasing the price of humanitarian assistance.

So, it's going to increase the need for humanitarian assistance and the price of humanitarian assistance in Yemen.

But I also want to mention that it's also countries that might not even necessarily be direct importers, or are major importers of agricultural products from the Black Sea.

Countries that were already experiencing high levels of food insecurity.

For example, the Sahel in West Africa, or the Horn of Africa.

There are a number of examples around the world, but this war has increased the price of emergency food assistance, which will limit the reach of resources within the UN World Food Program.

They're estimating that because of the war, operating costs will increase by $23 billion per month.

I just want to say, third of all, across countries around the world, those who will be worst affected are the most vulnerable, who are the most food insecure in any country.

What you see among the poorest populations are when food prices rise, consumption shifts from more nutritious food to cheaper food that's lower in nutrition.

So, you see rates of malnutrition spiking among the most vulnerable populations anywhere around the world in times of crisis like this.

You know, Caitlin, earlier you mentioned India and the fact that as a result of rising food prices, they put, of course, imposed a ban on their food exports.

Can you explain to us, you know, the significance of this decision, and how concerning it wouldn't be if other countries were to follow suit?

Actions like this, and export restrictions put in place by other countries have a real significant impact.

The last major global food supply and price crisis happened in 2007, and 2008.

And it was the result of a suppression and production from a number of producing regions around the world, coinciding with high energy prices.

And on top of that a number of countries put in place export restrictions.

So, the prices of a number of commodities doubled in a very short amount of time.

And in retrospect, the World Trade Organization, estimated that of the price increase that was experienced then, 40% of it was due to the export restrictions that were put in place by countries.

So, all of this is to say that, that export restrictions have a very significant role in price increases around the world.

And I think that's one of the main reasons that you see, among diplomacy that's happening at this time around this crisis.

A major point of the diplomacy is encouraging countries not to impose export restrictions like this.

So, what can we do right now to mitigate the impact of this growing global food crisis?

I think that... first and foremost, the most important thing is for Russia to stop this war, and to help bring Ukraine back to prewar levels of agricultural productivity.

Again, it's going to take a significant amount of time and investment to do that, but it's achievable.

And I hope that that happens as quickly as possible, as soon as conflict subsides.

Apart from that, I think it's important to continue to invest in agricultural production in other producing areas around the world in ways that make sense in terms of climate change, and water security as well.

So, I think that continuing to invest in agriculture, in sustainable agricultural practices is incredibly important.

And also addressing immediate needs.

As I mentioned, the price of emergency food assistance has increased as a result of this war.

So, it's very, very important for countries to continue to contribute to the UN World Food Program in order to address the needs of those who are most severely impacted right now.

Caitlin, how long will it take for everything to get back to normal?

When, if ever, do you see food prices starting to sort of level off?

Or at least start coming down a bit?

Yeah. But prior to this war, I saw some analysts predicting that food prices would start to decline at the end of 2022.

I'm certainly not seeing those predictions anymore.

Perhaps in 2023?

I think that markets will make up for the reduction in exports from Ukraine, I think that's going to happen, but it's going to happen at a cost.

And that's going to be higher prices, which again, affect certain countries more than others, and affect the most food insecure populations everywhere.

And again, I think it's quite possible.

And I think that Ukraine's agricultural productivity will be brought back to prewar levels.

But again, given the level of destruction, and given that Ukraine's agriculture sector has been a direct target of Russia, again, I think it's going to take a significant amount of time and funding to do that.

All right.

Caitlin Welsh, thank you so much for your time.

Really great to have you on the show.

Great. Thank you very much.

The current food crisis is a reminder that in a globalized society, we are all deeply connected with each other.

The conflict that began in Ukraine now poses a threat to the worldwide food supply.

And the longer the fighting rages on, the lesser the availability of grains and the heavier the price we will all be paying for it.

I'm Del Irani, thanks for your company.

I'll see you next time!