How The Russia-Ukraine War Is Influencing Inflations & Food Security Issues Globally- World Bank
In their latest Food Security Update, the World Bank highlights that domestic food price inflation remains high around the world. High inflation continues in almost all low- and middle-income countries and the share of high-income countries with high inflation has increased sharply.
The most affected countries are in Africa, North America, Latin America, South Asia, Europe and Central Asia. In real terms, food price inflation exceeded overall inflation (measured as year-on-year change in the overall CPI) in 81% of the 153 countries for which food CPI and overall CPI indexes are both available.
In a recent blog World Bank Vice President for Sustainable Development Juergen Voegele points out that hidden behind the worst global food crises in a decade, fertiliser prices have skyrocketed and remain volatile.
This poses a threat to global food security as the planting season starts. “So far, the war in Ukraine has mostly affected countries importing wheat and corn. But many countries, including some major food exporters, are net fertiliser importers.
Persistently high fertiliser prices may spread to a broader variety of crops including rice, a staple which has not yet seen war-related price hikes. We must act now to make fertilizers more accessible and affordable to avoid prolonging the food crises,” said Voegele.
He goes on to discuss three policy proposals for making fertilizers more accessible and affordable:
Countries should lift trade restrictions or export bans on fertilizers;
Fertiliser use must be made more efficient, for instance by providing farmers with appropriate incentives that do not encourage overuse; and
Invest in innovation to develop best practices and newer technologies that may help increase output per kilogram of fertiliser used.
The situation in West and Central Africa
In West and Central Africa, high food prices and pervasive conflict continue to drive food insecurity, which is projected to affect more than 38 million people from June to August 2022. Prices for staple foods in West Africa are at or near record levels, driven by below-average 2021/2 production and disrupted trade flows.
“The ongoing war in Ukraine, which has increased global food, energy and agricultural input prices, has exacerbated atypical price trends for local and imported foods. In addition to reduced financial access to food, conflict is one of the critical drivers of food insecurity, especially in the Liptako Gourma region and northwest Nigeria.
“It is expected that conflict and fatalities will reach a record high in 2022, increasing food insecurity in the region. The number of conflict events and fatalities reported from January to June 2022 has already exceeded what was recorded in the first half of 2021,” reads the Update
The World Bank points out that despite favourable plant growth conditions in many parts of the Sahel, fertiliser shortages are expected to limit food production.
West Africa especially is highlighted dependent on fertiliser imports from Russia and Ukraine so the ongoing war is causing significant fertiliser shortages and price increases. A deficit of 1.2million to 1.4m tons of fertiliser is projected for the region. These shortages could translate to losses in cereal production of ~20m tons which is equivalent to more than a quarter of production in 2021.
Coupled with East Africa data, food security is looking overstretched
In the very short term, the fertiliser scarcity will affect Burkina Faso, Ghana and Mali most acutely with supply gaps ranging from 69% in Ghana to 88% in Mali as of April 2022.
“Recent data confirm that, although an overall favourable rainy season has allowed planting operations to intensify in Burkina Faso and Mali, conflict and lack of fertiliser are limiting planting. If the crisis persists, fertiliser shortages will also critically limit next year’s growing season in other countries in the region where supply gaps have been narrower and contribute to high levels of food insecurity in the medium term,” reads the Food Security Update.
Calling this the worst hunger crisis in the greater Horn of Africa region in the last 70 years, the World Health Organization points out that trade openness and continuous movement of goods are vital for food security.
In eastern Africa, the most traded commodities are maize and wheat. Other food staples are traded and essential in the household food basket such as rice, sorghum, and sugar). Trade between countries in the region for the afore-mentioned commodities increased to above-average levels, such as exports from Ethiopia, Tanzania, and Uganda to food-deficit countries including Burundi, Kenya, Rwanda, Somalia, and South Sudan. Reduced rainfall and droughts affect trade in other protein-rich food sources such as livestock.
The rest of the world is also feeling the pinch
Against a backdrop of global food and fuel price spikes and overall inflationary pressures, countries in the Middle East and North Africa are experiencing high food price inflation, exacerbated by the large portion of food consumption that comes from imports.
Where the food inflation percentage change year-on-year in South Africa sat at 6.8% in August 2021, it now sits at 9.2% in July 2022.
The World Food Programme says by June 2022 the number of acute food insecure people around the world, whose access to food in the short term has been restricted to the point where their lives and livelihoods are at risk, has increased to 345m in 82 countries.
In addition, the World Food Programme and the UN’s Food and Agriculture Organization warned that acute food insecurity could worsen in 20 countries or areas from June to September 2022.
