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World Food Crisis: Causes, Consequences and Solutions

The war is exacerbating the food crisis, but to end it, the United States must first realise no military solution to the conflict in Ukraine will bring about the defeat of Russia it seeks.
Food Crisis

There is a world food crisis spanning the realms of production and distribution. According to the Global Report on Food Crises 2022, acute food insecurity afflicted approximately 193 million people in 2021. They were based in 53 countries/territories. This number was 40 million higher than those plagued by acute food insecurity in 2020. All this before the outbreak of the current armed hostilities in February 2022 in Ukraine, which has undoubtedly aggravated the world food crisis.

Before turning to the causes of this crisis, it may not be inapposite to review the working of the contemporary world food system. It has been argued that the elites of the developed countries, based principally in the temperate lands of the Global North, seek to exercise control over many primary commodities (crops and minerals). This is the case since most such primary commodities are not domestically available in the Global North.

These primary commodities are predominantly (but not exclusively) based in tropical and sub-tropical regions, home mostly to developing countries. This control involves a squeeze on the incomes of the working people, who release a greater volume of primary commodities to the developed world. Consequently, the working people in these countries are subject to chronic hunger, malnutrition and famine. However, this squeeze is not symmetrical across all segments of working people within or across developing countries.

As far as crops are concerned, this export to the developed countries often involves a shift of cultivable land use from food to non-food crops and the export of food crops at the expense of domestic food security. Developing countries where this shift has gone far enough end up dependent on food imports. This not only makes them vulnerable to volatility in the world market but also beholden to corporate agribusiness (and the elites of the developed countries more generally, especially through international finance, which controls much, though not all, of world trade in food and primary commodities.

During the centuries-long colonial period, this control of developed-country elites--the colonisers--over primary commodities resulted in the deaths of hundreds of millions of people in colonies and semi-colonies due to famines and epidemics exacerbated by such famines. The British colonial government squeezed the purchasing power of working people in India by prioritising the drain of wealth through the export of primary commodities. It largely ignored public investment in agriculture that could have been land-augmenting, and these played a principal role in such deaths. However, the promise of political decolonisation, inadequately realised during the dirigiste period, was soon belied by the neo-liberal project, which reinstated domestic food insecurity in many developing countries. It attenuated even the limited public support for agriculture put in place during the dirigiste period.

Therefore, the working of the contemporary world food system reproduces food insecurity, especially in developing countries. Corporate agribusinesses, coalescing with international finance and principally based in developed countries, control trade in many agricultural inputs and outputs. Besides, much of the contemporary world food trade is carried out through the US dollar-based financial system. A key element in this control is the speculative stock holding of primary commodities, which are conducive to profitable speculation since supply adjustment (especially for crops) requires a certain amount of time to produce fresh output.

For instance, if bad weather is expected to result in reduced world wheat output in the immediate future, then speculators—in other words, corporate agribusinesses coalescing with international finance—will enhance their speculative stock-holding of existing wheat stocks. This exacerbates food insecurity and will increase wheat prices. If wheat output rises in the future, and if there is a bumper crop, corporate agribusinesses may physically destroy a part of their stock-holding of wheat if that is more profitable (through consequent changes in price and traded volumes of wheat) than selling or storing wheat. In other words, world food insecurity is a principal consequence of the contemporary world food system dominated by corporate agribusinesses coalescing with international finance.

The current armed hostilities in Ukraine and economic war on Russia initiated by the United States and its “allies” has aggravated the world food crisis. This crisis was already severe due to the manner in which corporate agribusiness coalescing with international finance capitalised on the disruptions caused by neo-liberal policy responses to the Covid-19 pandemic.

Consider the realm of distribution of existing food stocks. According to the Food Price Index of the Food and Agricultural Organisation, the prices of cereals increased by 17.1% in the world market between early February 2022 and early March 2022. During this same period, the world market prices of oilseeds increased by 24.8%.

Now, Russia and Ukraine together account for 33% of world exports of wheat, 27% of world exports of barley, 17% of world export of maize, 24% of world export of sunflower seeds and 73% of world export of sunflower oil in 2021 according to the Global Report on Food Crisis 2022. Disruption of these supplies is leading corporate agribusinesses, fused with international finance, to profitably enhance their stock-holding of other existing volumes of such (and related) crops, resulting in a prohibitive rise in world prices of primary commodities.

The United States and its “allies” claim that the navy of the Russian Federation is blockading Ukrainian ports on the Black Sea, which is preventing ship-based exports of agricultural commodities from Ukraine. Attempts to transport agricultural commodities by rail from Ukraine face two constraints. First, currently, the railways, in a given period of time, can only handle a lower volume of such freight compared to ships. Second, the armed forces of the Russian Federation are militarily targeting the railway system of Ukraine to prevent arms supplies to Ukraine by the United States and its “allies”. If the United States and its “allies” seek to enhance their arms supplies to Ukraine, then this could result in further attacks on the railway system of Ukraine by the armed forces of the Russian Federation.

This will further reduce rail-based agricultural exports from Ukraine and reduce other food imports into Ukraine and the movement of people, exacerbating the humanitarian crisis. Besides, there are concerns about the size of the next agricultural harvest due to the ongoing armed hostilities in Ukraine. Suppose that harvest turns out to be significantly lower than at present. In that case, domestic food security concerns will adversely influence the magnitude of agricultural exports from Ukraine.

When confronted with this impasse, mainstream media in the United States and its “allies” have come up with two unviable solutions. First, the use of military means by the United States against the navy of the Russian Federation to restore agricultural exports by Ukraine through the Black Sea. Given the massive retaliation one can confidently expect from the military of the Russian Federation to any such move, such an option will remain a non-starter. Second, the United and its “allies” seek to use Belarus as a land transit route for agricultural trade to ports in the Baltic republics in return for a temporary waiver from unilateral sanctions. However, this cannot be a complete alternative to ship based transport of primary commodities through ports in the Black Sea.

Given the recent attempt of the United States and its “allies” in Belarus at regime change and the consequent attenuation of strategic autonomy of the current Belarus government with respect to the Russian Federation, the chances of success of such offers by the United States and its “allies” are underwhelming.

The government of the Russian Federation, on its part, claims the Ukraine armed forces have mined the approaches to Ukrainian ports in the Black Sea, which is preventing the navigation of ships from Ukraine. Further, Russia produces and exports more than Ukraine of most crops that both grow. Therefore, the government of the Russian Federation claims that unilateral sanctions imposed on Russia by the United States and its “allies” are the main hurdle to its export of agricultural commodities. Given this ongoing food distribution crisis globally, many governments (India, Kazakhstan, etc.) are restricting food exports to try and ensure domestic food security.

Turning to the realm of agricultural production, note that Russia is the leading exporter of nitrogen fertilisers globally, the second-largest exporter of potassium fertilisers in the world and the world’s third-largest exporter of phosphorous fertilisers. Besides, Belarus is a leading exporter of potash fertiliser. The economic war on Russia (and Belarus) by the United States and its allies is disrupting the supply of these fertilisers and a further increase in fertiliser prices that were already high. This further rise in fertiliser prices is principally due to corporate agribusiness, coalescing with international finance, capitalising on this through speculation.

This rise in fertiliser prices and the rise in energy prices due to the economic war on Russia are leading to an increase in cultivation costs. It may compel many peasants to reduce the area under cultivation, or it could cause a further rise in food prices both from the cost side and due to the speculative activities of corporate agribusiness, coalescing with international finance.

Further, the economic war on Russia has accelerated inflation in many countries, including the United States. Consequently, the US Federal Reserve is increasing its policy rate of interest. Unless other central banks hike their policy rates of interest, international finance will exit from these countries. Such hikes in policy rates in developing countries will result in an increase in lending rates to borrowers. Since peasants in developing countries are the least capable of accessing credit at higher interest rates (quite unlike the heavily-subsidised corporate agribusinesses of developed countries), their agricultural production will be further squeezed either by higher interest loans or lower credit access. Since many poor peasants tend to be net foodgrain buyers, this comprehensive squeeze on agricultural production will increase food insecurity for workers worldwide and these peasants.

But this crisis in agricultural production will be further exacerbated by adverse climate change. In the Rabi season 2021-22, wheat output has been estimated to fall by more than 10% due to an unseasonal heatwave in wheat-growing areas of India. Besides, studies demonstrate that the probable frequency of extreme heatwaves in North India and Pakistan will increase this century, compared with the twentieth century, with attendant deleterious consequences on agricultural output. Further, after reports of drought in France, crop yields are expected to reduce this year. Such phenomena will enable corporate agribusiness, coalescing with international finance, to engineer further increases in food prices through speculation resulting in mass hunger and famine.

The severity of the ongoing world food crisis requires a comprehensive set of short term and long term policy responses. In the short term, the United States must realise that there is no military solution to the conflict in Ukraine that will bring about their hoped-for “defeat of Russia”. The United States must recognise that if it imposes sanctions on other countries, these countries’ governments will retaliate. This retaliation will not necessarily be constrained by the usual play-book the United States prescribes to other countries in the “rules-based international order”.

The rest of the world is paying a higher price for the United States’ refusal to accept a diplomatic solution to the conflict in Ukraine. Therefore, the governments in Europe, especially France and Germany, must take the lead in bringing about a diplomatic solution to the conflict in Ukraine and ending the economic war on Russia. This will provide immense succour to those at the receiving end of the current world food crisis.

Further, all governments need to institute administrative action against speculation in food and related commodities through the deployment of stock-holding limits for private entities, regulation of food trade, direct government distribution of food, and government sale of food in the private market etc. International trade in food and fertiliser in currencies other than the US dollar must be adopted where appropriate. The greater cooperation among developing countries that such measures require will also lay the foundations for longer-term efforts to deal with the world food crisis.

Over the long term, all governments must prioritise domestic food security through suitable changes in agricultural land use towards food crops and regulation of food exports. Besides, government support for peasant production must span the entire gamut of agrarian interventions, including the transformation of agriculture in the direction of climate resilience, grounded in agroecology, through measures such as land augmenting public investment. Such changes are not merely administrative and require fundamental changes in the international political economy. No matter how remote such changes may seem from the vantage point of the current conjuncture, they are superior for working humankind to the alternative, which involves avoidable deaths of millions, as happened during the ongoing Covid-19 pandemic.

The author is a professor at the Department of Economics, Satyawati College, University of Delhi. (With thanks to Dr Navpreet Kaur for critical interventions in a previous version of this article.) The views are personal.

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