Supply of food at risk due to the war waged by Russia against Ukraine. Russia and Ukraine together account for 30% of world grain exports. Consequently, disruption to grain exports they will have clear implications for consumers in terms of both availability and price. But there is a solution.
War in Ukraine: food supplies at risk
As Alexander Monk, Felix Odey and Mark Lacey, Portfolio Managers, Global Resource Equities, Schroders point out, it will be especially the emerging markets that will be affected because they are traditionally the most important recipients of Russian wheat. In recent years, the three largest importers of Russian wheat have been Egypt, Turkey and Bangladesh. The situation will be exacerbated if the governments of richer countries (such as the EU) start intervening in agricultural markets by introducing subsidies on food prices to limit inflation. This could lead to a situation where the gap between the richest and poorest nations in food availability will widen further, with prices rising beyond the sustainable level of the population that, in some countries, is already suffering from. the scarcity of food.
All this, the analysts specify, happens at a time when the climate change and extreme weather events are putting pressure on agricultural land. For example, theHot, dry summer of 2021 reduced Canada’s grain production. University studies indicate that even in a scenario of 2 ° C increase in temperatures, a 14% decrease in the corn crop and 12% in the wheat crop is expected. At the same time, the growth of the world population requires greater quantities of food. In short, experts say, the invasion of Ukraine and its implications on the supply of fertilizers and food products further increase the weakness of a precarious food and water system. Without action, this could have an extremely negative impact around the world. While the shortcomings in this case will be a consequence of the war, the lack of security on the food front could in turn become the cause of new conflicts.
The solution could be that of create a sustainable food and water system, one of the most pressing challenges in the world today. “Companies responsible for food safety and sustainability need to act quickly to try to prevent such negative consequences,” said Monk, Odey and Lacey who believe “30 trillion dollars of investments are needed by 2050 to achieve this ambitious goal. There are three structural directives for the change: 1) higher yield and agricultural efficiency, thanks to technology; 2) change in diets globally, with a reduction in meat consumption; 3) an important reduction in waste and emissions “.