GAIN Interview Cruncher - How war in Ukraine impacts global food supplies

GAIN Interview Cruncher - How war in Ukraine impacts global food supplies


Geneva, 28 March 2022 - 

The war in Ukraine has brought into sharp relief how tenuous some of the staple foods we take for granted can vanish. The situation is dire and threatens world’s food security, with many GAIN countries directly affected. Russia and Ukraine are particularly important for Africa's wheat imports with almost 40% being sourced from that area. Disruption there means these countries have to go elsewhere for their imports, causing a drive-in price and demand. Russia's agricultural trade with Africa is predominantly wheat (90%) and for Ukraine, wheat and maize count for approximately 80% of its agricultural trade with Africa, creating a massive knock-on effect for fortified staples.

Sadia Kenzig (SK): Hello Everyone, Thank you for joining this Interview Cruncher "GAINing Insight – How war in Ukraine impact global food supplies".

I'm Sadia Kaenzig, Head of Communications at GAIN and moderator of this episode.

Before Feb 24, the world was the theatre of a double whammy of drought & catastrophes from Climate Change and the COVID pandemic that hit us really hard. Now with the war in Ukraine, and in just few weeks, we see that millions of people are put in harm’s way. Going far beyond Ukraine. De-escalation is key. 

Today our panellists, all from the Global Alliance for Improved Nutrition will try and give a prismatic view of what this war will entail from a food shortage spectrum: 

Stella Nordhagen, our expert in Knowledge Leadership will give us some facts and figures and proof points on the trends we see and potential implications for global hunger.

Lawrence Haddad our ED will give the global perspective of such impact and what key stakeholders can do to counter it

Wubit Girma the new country director in Ethiopia – warm welcome to her -  will give the country and sub sahara perspective. Often times Africa is said to be the breadbasket of the world. Could they step up.

And Penjani Mkambula, our Global Programme Lead for Large Scale Food Fortification - will speak about one effective tool that works when everything else falls apart, food fortification: why it matters especially when faced with food insecurity.

SK: Stella Nordhagen thank you for being with us. Stella, we see that the war in Ukraine has engendered not only a big humanitarian crisis, with all the geopolitical game that's around it, we we have also this big disruption on food supplies because Ukraine and Russia for that matter, they both account for 29% of wheat supply at the global level. Disruption in that supply would imply food insecurity and plunge millions of people into hunger, so could you tell us a bit about the trends and the facts and figures that you see coming out of that? Thanks.

Stella Nordhagen (SN): Thanks, Sadia. First, it’s important to note where we started from, even before the Russia-Ukraine crisis began as you can see in the graph here which is made by the International Food Policy Research Institute (IFPRI) using data from the UN Food and Agriculture Organization (FAO):

  • Pre-war, food prices were already at the highest levels since 1975 due to poor harvests in certain regions, strong global demand, and to a lesser extent supply chain issues related to the pandemic 
  • This was taking place in the context of general price inflation in many countries, which was leaving household budgets stretched
  • And the numbers of people undernourished, meaning they are not getting enough calories to meet minimum energy requirements, was also on the rise, with over 100 million additional people going hungry in 2020 as compared to 2019.
  • So, we were not going into a shock to the food system from a position of strength. 

The Russia-Ukraine conflict can further exacerbate this through three channels.

First is the most obvious, by directly reducing food supplies. 

  • Russia and Ukraine are real agricultural powerhouses and play an important role in global production of wheat, barley, maize, and sunflower, used to produce cooking oil. 
  • For example, in 2021, wheat exports by Russia and Ukraine accounted for about 30% of the global market. Combined, sunflower oil exports represented 55% of the global market.
  • Nearly 50 countries depend on Russia and Ukraine for at least 30% of their wheat import needs.
  • Of these, 26 countries source over 50% on their wheat imports from these two countries. 
  • This includes numerous often-food-insecure countries, such as Eritrea which gets about 100% of its wheat from the two countries, Somalia, which gets over 90%, Democratic Republic of Congo (DRC), over 80%, Madagascar, over 70%
  • For context, pre-crisis, about half of the population of those four countries was already undernourished
  • Most of the wheat, barley and sunflower seeds crops were already harvested and exported in the summer and fall, but Ukraine typically exports a lot maize through the spring into the early summer. 
  • About 7% of global wheat was expected to be exported from Ukraine and Russia combined from March to June 2022, and Ukraine was expected to export about 18% of global maize over the same period. 
  • In addition, planting season for barley and maize will begin in March and April. 
  • Conflict and insecurity can directly limit Ukraine’s ability to plant, tend, harvest, and export these crops, and Russia’s production may also be affected – including by sanctions and other countermeasures placed on it by the international community 

SK: Stella what we also see is that perhaps 50% of the world's supply in fertilizers are coming from Russia, so what would that imply as well?

SN: Yes indeed.

  • Russia is a key exporter of fertilizers: In 2020, it was the top global exporter of nitrogen fertilizers, the second leading supplier of potassium, and the third largest exporter of phosphorous fertilizer.
  • 25 countries rely on Russia for 30% or more of their supply of these fertilizers
  • For example, Mongolia obtains nearly 100% of its fertilizer from Russia, Honduras and Cameroon each get about half. so this is a supply chain that goes around the world and feeds into agriculture in many different regions.
  • High fertilizer prices and shortages caused by disruptions to Russian exports could have serious implications, particularly in lower-income countries where they could significantly reduce fertilizer use 
  • This would likely result in poor local harvests at a time of reduced global supply and record prices.

SK: Stella what about the energy crisis?

SN: Finally, there is the effect on energy markets.

  • Russian exports of natural gas account for about 20% of global supply and about 40% of the EU’s current imports 
  • Lost production, reduced trade, and sanctions could have large impacts on these exports, increasing prices for natural gas directly and indirectly for energy prices across the board
  • Because energy is an input into just about everything, and an important element in household budgets, this will have far-reaching effects 
  • It will likely make food production, distribution and preparation more costly, and higher fuel prices will lower people’s income for other necessities, including food

Putting all of these together, what can we expect? Preliminary modelling by the UN Food and Agriculture Organization suggested a moderate-impact scenario would lead to price increases of 9% for wheat, 8% for maize, and 10.5% for oilseeds.

  • In a severe scenario, there would be about 20% price increases for wheat and maize, and 18% for oilseeds in the short term, declining slightly in the medium term 

SK: And the implications of that on food and security what would that be about?

SN: When staple foods like wheat become more expensive, people tend to protect their consumption of these 'essential' foods by reducing consumption of more 'optional' foods – often highly nutritious fresh vegetables, fruits, and animal-source foods. 

  • As prices rise further, they may need to cut their consumption of staples, as well.
  • The result is a decrease in diet quality.
  • And rising food prices have the greatest impact on low-income households, which spend larger shares of their income on food.

Either way the result is a reduction in diet quality and these changes in food prices typically have the greatest impact on low income households because those households are spending a larger share of their income on food to begin with putting kind of all of those effects together the FAO again using modeling estimates that this would result in an increase of about 8 million additional undernourished people worldwide between 2022 and 2026 in that moderate impact scenario I talked about and up to 13 million in a severe impact scenario

SK: Wow!

SN: Yeah Wow! So it's really historic reality that we're facing here. It could be, and I mean of course, we need to consider also the more direct effects for those in and fleeing Ukraine war causes misery across the board and doesn't spare nutrition.

Conflict is widely recognized as one of the key drivers of food insecurity globally so there could also be localized effects directly caused by that conflict.

Now I do, before we go close, I do want to note that this is preliminary data and modeling on a fast changing topic so a lot could change as the situation plays out in addition the food system can be surprisingly resilient at the moment food stocks are strong and harvest prospects for the next season outside of Russia and Ukraine are also generally fairly positive global demand is also slowing so all of that suggests that these kind of price increases could be short-lived so it's not time to panic, but it is important to anticipate these potential changes and to cushion their negative effects and for leaders to do their utmost to restore peace so that there can be stable agricultural production and markets won't go through this kind of continued disruption in the long term.

SK: Thank you Stella, thank you also to give that other bright take on it that not everything is that bad as well and of course the plight of Ukrainians and the war there it's beyond imagination and we feel with them too but thank you very much for this outlook.

SK: Lawrence from what Stella has described  and what the war means for the world's  food supply  we see prospects that things won't look that good. I wonder if you could expand on how the war dynamics here is unlike any other we have currently? Thank you.

Lawrence Haddad (LH): What's different about this war - this invasion - is that it's happening in an enormous piece of land that is one of the bread  baskets of the world in terms of  wheat and barley and sunflower. it's just a critical producer for the region and for the world.

When you have this  disruption happening you're going to get a disruption in food production. Food production in Ukraine, farmers should be getting their fields ready right now, but at the moment there's metal and slayed bodies occupying those fields when there should be seeds and water. This is a big problem because Ukraine, as as Stella mentioned, is responsible  for a big share of global export of  wheat and maize and barley and sunflower oil. That's the first problem.

Second problem is that Russia is also a very important exporter of many of these foods and their production and export is disrupted by the war   effort  and by the economic sanctions, for food for sure, but also for exports of the nutrients that are so critical for fertilizers everywhere in the world, especially in Africa and North Africa. In addition to that you've got the price of energy going up, because Russia is such a big exporter of energy, oil and gas and the supply for export and the demand from the other side has been curtailed.

Because energy is such an important part of food production food processing, food distribution .. any rise in food prices, any rise in   energy prices is going to drive up  food prices. You've got this triple whammy of Ukraine exports being damaged, Russian exports being damaged to Russian fertilizer exports being damaged and the price of energy going up. These four factors are combining in a very very toxic brew.

SK: Lawrence in the scheme that you're just  sketching out you said in an interview in Al-Jazeera last week, that we see a rerun of the Arab uprising  and we see things happening right now in Morocco, in Sudan... so how could this be a  test to country stability?

LH: You know this this crisis is coming on top of two other crises:  the COVID crisis -  which is maybe abating a little bit in Europe and North America, but it's not necessarily abating so much in areas that are not vaccinated, such as Africa the 10/15% of population has had the full three treatments, still very low  -  and then on top of all of that is climate change which is slowly but persistently and inevitably squeezing the life out of many growing areas; food growing areas.

You've got this conflict in the bread basket on top of the other two crises and all of this is putting a huge amount of pressure on food prices, which before the conflict in Europe, the food prices were there the highest real level since 1975, and remember 1975 created the World Food Program -  that's how big a deal those food prices were back then -  so it's an even bigger deal now and we know   that food price spikes and food price volatility is one contributing factor to civil unrest and we know that in many parts of North Africa and the Middle East, food price subsidies are really critical.  Acritical part of the social contract between civilians, civil society and the government.

Government says we keep the price of staple foods low and in return you give us loyalty and fidelity and so that contract, that social   contract, is under huge pressure because of the rising food prices.

SK: How can governments, key stakeholders mitigate the effect of such war?

LH: The first thing is obviously to ceasefire and the war has to end or at least be put on pause.

We must see an end to the weaponizing of food, the Russian invading army has weaponized food. They are putting in place sieges of big towns, cutting off supplies of food and water and this is a gross violation of human rights. Never mind just the right to food, but of all human rights and this must this must end immediately. Immediately.

The second thing that it needs to happen is that humanitarian agencies can't be scrounging around and begging for money. They can't wait, they need to get money now.

The unprecedented sort of set of sanctions, the unprecedented military aid is needed and the rapidity of what's happened is to be welcomed, but the humanitarian response also needs to be rapid and decisive and no haggling - immediate action is required.

In the in the more medium run I think what this has shown is that  whenever there's a war in a bread basket -  whether it's in Ethiopia or Kenya or in in places like Yemen or Syria - there's going to be damage everywhere. We need to diversify the the number of bread baskets in the world, we can't just rely on five or six, there needs to be in numbers in the 20s and 30s we need to diversify.

In an uncertain world diversification is a key solution and for Africa that means really beginning to finally exploit the incredible potential  the continent has. It has some of the richest soils in the world, it has some of the most hard-working labor forces, it has rapidly growing income and markets, and the potential for Africa just to be a provider for itself and also for the rest of the world is  immense and now, is the time for governments to step up and invest in their agriculture and forthe rest of us to help them and finally - I think  - finally the really important thing, well the next thing is that trade has to keep flowing.

I think whenever there's a crisis, exporting countries immediately clamp down on their exports and say "well our domestic populations need the food" and it's very understandable if that happens, but in a way history has shown that's a race to the bottom: everyone will   lose out because of the lack of flow of food.

Final thing I'd say is who are the people, who are most affected by any crisis? It's always the poorest, the most malnourished, and   within that group it's the very young children. The very young children, the children in the womb, the children that are one year two years old: their brains, their immune systems, their bones, their central nervous systems, their muscles are growing at an incredible rate.  All the systems that are essential for their ability to survive and thrive are being laid down in that first 1000 days, so we have to protect them from the ravages of conflict climate and covert because if we don't, their damage, their devastation will be the legacy of this conflict.

SK: Thank you Lawrence. Just one last question regarding GAIN. How do we fit into this equation?

LH: Well GAIN's mission is all about making  sure that safe and nutritious food gets to the people who need it in a way that is   available in markets and stores: it's affordable, it's attractive, and it's desirable food and so getting getting safe and nutritious food is one of the first victims of any conflict because these kind of foods they're more perishable, they become unsafe, they spoil, they become rotten. We have to keep nutritious, safe food flowing to people who need it and that means keeping the small and medium enterprises that produce, supply, process, transport market the food, keep them going with finance, with support. It means keeping food system workers - who are the lifeblood of the food system, they're some of the most exploited workers in the world - we need to keep them safe and healthy and get nutritious food to them. It means keeping food markets open, often food markets close when there's a lot of uncertainty, we need to do what we can to keep them open and also it means keeping supplies of staple foods -  everyday foods, that are consumed by everyone every day, grains, edible oil, salt these kinds of foods -  keeping them fortified with essential micronutrients, like zinc and iron and folate. These are things that are absolutely essential for human development and prevention of illness and birth deformities, these kinds of nutrients have to keep going.

We will redouble our efforts in all the countries we work in we will work hard to get these messages onto the G7 agenda and the G20 agenda later on in the year and we will work really hard to keep the most vulnerable, very young children protected and safe.

SK: Thank you Lawrence.

SK: Dear Wubet Girma, welcome! If you may could you tell us a bit about the impact of the war in your country please?

Wubet Girma (WG): Thank you so much Sadia for this opportunity um before going into that I would like to highlight that this happened in the background in the backdrop of a country going through conflict and natural disasters so it is an added burden for Ethiopians.

Most of Europeans live off of agriculture and Ethiopia, primarily uses wheat produced in country, however though there are significant  portions also being important however beyond the impact on wheat how the war has affected Ethiopia is through other products that are primarily imported, such as oil, which we have seen a record-breaking price rise over the past few weeks.

Fuel it's also another another product that we are observing a price rise which in also has its effects in terms of other products and making sure that those are accessible and reachable to different parts of the country 

SK: What about the Sub-Saharan Africa as a whole, how do you see the war impacting the continent?

WG: I think it's good to highlight that Sub-Saharan Africa is a part of the world where a significant portion of the population lives off of agriculture and it has the potential to to meet the needs of the residents on the continent as well as across the world. Although this is not the ideal scenario I would say this crisis might be a way for Africa, especially for smallholder farmers, to look at increasing their productivity and for the governments and other partners to look at systems and structures that could improve that.

We could also look at other factors that could have affected the accessibility and availability of, for example trains like wheat through supporting transportation and other infrastructure. I believe this could be an opportunity for farmers in Sub-Saharan Africa given the opportunity in the markets that would be accessible so for the small medium-sized enterprises and all the impact on them.

SK: How do you see that specifically for Ethiopia?

WG: I would say the rise and in fuel would have a significant impact on their productivity, as well as distribution of their products, but I think this is an area that we might need to look into given that this is an emerging crisis and we are seeing the impacts at different levels including at enterprises and households.

Household levels, we often talk about it and for the past 20 years about building the resilience of different communities at the society level and do you see that all the efforts that were put in the resilience part do you see that could also counter affect the repercussion of the war in sub-saharan africa

WB: Definitely. As human beings I think we have overcome quite a range of crisis and I am the kind of person who would like to believe that beyond this crisis, we would come out more resilient. But it is also an opportunity to look at our ways of working whether it's in our in agricultural production or other aspects and see how else we can improve as human beings even how things are perceived. So looking at paradigm shift as well as you know letting that inform our action and decision going forward 

SK: Thank you Wubet Girma, thank you.

SK: Penjabi welcome! So Penjani, if you could tell us please what is the status of food fortification, especially for the big staple foods like, oil wheat, and maize. Could you please just give us a snapshot of the status of food certification regarding those big staples worldwide? Thank you.

Penjani Mkambula (PM): Thanks Sadia. So there's been a huge progress particularly over the last 20 years or so regarding the status of food for fortification globally.

To give you some figures you know for example 90 countries now have mandatory legislation for fortification of wheat - that is to say by law industry in those countries need to fortify wheat with one or more micronutrients as mandated by the governments -  in terms of maize there is at least 19 countries where fortification of of maize is mandatory, 12 of those are in Africa.

By the way of the 90 countries with mandatory legislation on wheat - over 50% of those are in Africa and Asia  and talking about edible oils, at  present there's laws in at least 33 countries where where fortification of edible oils is mandatory - that's fortifying edible oils with vitamin A and D -  and you know over 90% of those are in Africa and Asia. 

So that's the status of play.

In terms of verification globally the one thing to note is that a large number of those countries import raw materials from Russia and Ukraine, for example for wheat Russia and Israel are large suppliers to a number of countries in Africa and Asia and the same is true about Ukraine. When it comes to edible oils, Ukraine is a major exporter of sunflower oils to a number of these countries as well as also a major exporter.

SK: So that's the current status and those are resources, so what would be the impact of the war in the food fortification programme?

PM: So we're seeing impacts at at three levels:

  • To begin with we're seeing impacts regarding agricultural inputs. Remember staple foods we start at the farming level, so wheat and maize farmers need fertilizers to grow bitterness which they supply to millers or industry for processing into fortified flour. Many countries import fertilizers from from Russia. The disruption in supply chains means that some countries may have to go elsewhere for their requirements of wheat or they may experience delays. That could have an impact on productivity of wheat or maize in these countries which then has a further impact on provision of  fortified foods so that's at the  agricultural level.
  • We're also seeing impacts regarding raw materials. A large number of countries import raw materials either wheat or maize from Russia or Ukraine, but also sunflower oil where Ukraine is is a big exporter. That has an impact in availability of  raw material and if that raw material is not available to be processed then you don't necessarily have the fortified wheat flour or maize or oils so that's that's that's the second impact.
  • The third impact is the rising prices. Generally speaking the prices of grain on the world market are going up because of the conflict that has a further impact on businesses that are importing the grains or sunflower oil for further processing it. This means it affects the businesses, but it also affects the availability of fortified foods because the prices are higher and people are paying higher prices and those that are vulnerable or those that are poor may not be able to afford it.

So we see those  three impacts  across qualification problems for your programs where we carry in

SK: In some countries do you  foresee any major hindrances?

PM: It's a mixed picture. We are very early in the conflict situation, but yes we do. Nigeria, for example, imports a lot of wheat from that region so that could have an impact if food producers in those countries do not find alternative supplies of wheat in good time.

This  situation is replicated a lot across a  number of countries like I've already said.

SK: You have brightly said that governments and food producers they have what it takes to mitigate the impact of the war in Ukraine so what can be done for the food  ortification here? How can they mitigate  that?

PM: I'll talk about that at three levels again.

  1. One is for those countries who are major exporters of grain or in the case of sunflower, major exporters of oil and you know some countries are beginning to place export banks or export restrictions or quarters because they're worried about food security. That shouldn't really be happening because we make a bad situation worse so for countries that are major grain producers I think this is the time for solidarity around the world and not make a situation worse.
  2. For importing countries they also have a responsibility in terms of  helping whether it's food importers or food producers within those countries, in terms of finding alternative sources: diversifying where they import their raw materials from, but also looking at what else can they do locally in terms of substituting imports of raw materials. Given the expected increase in the price of fortified foods as a result of the increase in the cost of wheat for example there are also other things that governments can do. One of them, for example, could be exempting customs due dates and tariffs on vitamin and mineral premix to make sure that fortified foods are affordable, but for those countries that also have some other tariffs or duties on these products - like grains - maybe this is also a time to think about suspending some of them because the prices are going up. We need to make food readily available. Another thing that governments can do is utilizing customs green lanes. What I mean by that is that at point of imports or at border crossings, government can prioritize the clearance step of foods to make sure that the foods are readily available so that's what the concept of customs plan green lanes is all about. Prioritizing prevalence of certain commodities that may be required in a country so that's one thing that governments can also do.
  3. Lastly  we can also think about social  protection programs. There's various governments that have got programs which give free  food commodities to vulnerable people in society, making sure that when they give that food is fortified. We could also look at those countries where they have already social protection programs, given the expected increase in the price of commodities. And finally for those that give cash transfer to vulnerable in society given the expected increase or the increase in commodities, governments should also be thinking about increasing the cash transfer so that the vulnerable and the poor in society can be able to afford a procurement of fortified food.

That's that's what I would say are some of the actions that can be taken to mitigate other impacts.

SK: Thank you Penjani. To conclude this episode here's a quick wrap up:

  • Disruption in food supply and higher food prices can be a burden for hundreds of millions of people all over the world. 
  • This will test the stability of governments. 
  • But not everything is that bad. 
  • Good management can mitigate the effects of this war. We should seize the opportunities. Dealing with the food-price increases that this conflict will bring will not be easy. But it can be done.
  • Most importantly, we must protect the nutrition status of the very youngest and deny the Ukraine war a terrible intergenerational legacy. 

Thank you. 

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