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Ukraine, blocked wheat and expensive energy. Towards the global food crisis

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With the ports blocked and the export of cereals at stake (which now it is no longer even known where to put them waiting to be able to take them out of the country), the effect of the war in Ukraine is being felt and worries the food security of the countries more exposed. But there is more, because expensive energy is translating into ‘expensive fertilizers’ that global agriculture will have to contend with. First, the ports. It is from the Black Sea that cereals, mainly wheat, traveled to their destinations before the war. Now “the ports are inaccessible and what little you manage to ship has very high shipping and insurance costs, practically impossible. Most exports now work by rail, road or river, three methods that do not have the capacity to get tons of wheat out of the country with the same speed with which they left the Black Sea: there are very long queues on roads and railways, with vehicles and wagons queuing for 2, 3, 4 weeks to be able to leave the country “, he explains to AdnKronos Mario Zappacosta, senior economist in FAO’s market and trade division. But in FAO there is also another “huge” one that concerns a more transversal and global impact of the war in Ukraine on international food security and agriculture: ” the increase in the price of energy. Agriculture is a large user of energy, also through the use of nitrogen fertilizers which are an energy product and the cost of their production is extremely linked to the cost of Energy: expensive energy, causes expensive fertilizers. Add to this the fact that Russia is the main exporter of fertilizers. All of this causes a rise in prices and a shortage of fertilizers on the world market. This – explains Zappacosta – will be a problem for poor countries, rich countries and for all products: there will probably be a reduction in products for the sown areas as farmers expect an increase in costs and, in the event that the surfaces are sown , there could be a reduction in yields caused by less fertilizer application. So: lower yields, lower productions, further increase in food prices that were already at record levels in 2021, before the war. So let’s talk about record after record. “” The FAO manages an indicator of international food prices and what we record is a level of this index that has never occurred since the FAO invented it in 1990. Things never seen before. ” Record prices, therefore, even before the war in Ukraine, “due to severe droughts that had occurred in some of the world’s major producing countries, such as Latin America and the United States, which had reduced yields. Before the war, the food insecurity situation had been deteriorating for a couple of years. In addition to the many traditional disasters, from the climatic factor to local economic crises and conflicts, the crisis induced by Covid has brought local economies to their knees. And just now that the planet was putting this period behind it looking at the economic revival, war broke out. It rains in the wet, as they say, and the poorest always pay “.” The alert is on countries that are strong importers and consumers of wheat, dependent on the international market: North Africa and the Middle East. In particular Yemen and Lebanon, but also Sri Lanka, which we are following with concern, and Laos “. With what consequences?” The Arab springs were triggered by a food problem, so there is a risk that social discontent could then be a rather worrying consequence of these scenarios on international prices “. As far as Europe is concerned,” the price of fertilizers will also be expensive for us and this will lead to an increase in production costs and therefore in European products. This applies to everyone on a global level “. The solution?” The FAO has always said it: peace is the main factor for things to go well, if a region or a country is at war everything becomes more complicated and sometimes the strategies become sub-optimal with respect to a situation of peace. “” The FAO is working on a financing mechanism for food imports. The idea is to create a global financial fund with subsidized credit to which the most vulnerable countries at risk of increasing food insecurity could have access if they are unable to buy on international markets “, adds Zappacosta, recalling that the FAO “supports farmers, in particular small farmers, so that they can sow and carry on production and therefore have a harvest, with seed distribution programs and agricultural inputs. Then, there are some general recommendations that the FAO addresses to the various countries, for example we recommend that the food and fertilizer trade remain as open as possible because if we begin to put customs barriers and therefore to exports, this only exacerbates the situation on the markets. international markets with further price increases “.

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