Geopolitics of Food: The Russian-Ukrainian War Impacts Global Food Security
The ongoing conflict between Russia and Ukraine significantly affects the global food trade, particularly given the historical and current roles of these nations as major food exporters. In recent decades, the globalization and corporatization of global value chains have led to increased interdependence among nations for food supplies. As such, the Middle East is heavily affected due to its status as the world's largest importer of cereals.
Several consequences arise from this situation:
- Reduced production due to poor harvests and labor shortages.
- Disrupted logistics, especially with Ukrainian ports in the Black Sea being closed.
- Imposition of export restrictions by both countries to secure their own food security.
- Financial sanctions limiting access to commercial financing, leading to higher insurance premiums and escalating transaction prices.
- Affected production in other regions, considering that both Russia and Ukraine are significant exporters of nitrogenous fertilizers, phosphates, and potassium.
This scenario brings back memories of the global food crisis from 2007-2008, when Middle Eastern countries had to limit domestic agriculture due to depleted groundwater resources and threats to water security. Agriculture is the largest consumer of water in the region, with differing impacts across arid regions and fertile areas like Turkey, Egypt, and Syria. These countries produce some grains but not enough to meet local needs, with Egypt, the world's largest wheat importer, relying on imports for about 60% of its consumption.
Autosufficiency in food is not an option in the Middle East, given increasing population and dietary changes leading to higher meat and dairy consumption. The trade of food commodities constitutes "virtual water," which can be imported by Middle Eastern countries through commercial exchanges. Virtual water refers to the water needed to produce specific goods, essentially embedded within them.
The disruption of trade flows impacts Middle Eastern countries unevenly, similar to the 2007-2008 food crisis. Gulf countries, with ample petrodollars, could afford price hikes and were concerned about export restrictions and liquidity reductions in international food markets. They responded by boosting domestic storage, investing in global supply chains, and securing long-term contracts. Companies like Saudi Arabia's SALIC, partnered with global grain trader Bunge, acquired a majority stake in the privatized Canadian Wheat Board. While investments in processing and distribution sectors have more significant effects than controversial land acquisitions in often food-insecure countries, they still lag behind in contributing to Gulf countries' food imports.
In response to the COVID-19 pandemic, the Gulf states implemented a comprehensive food security strategy encompassing storage, price control, and optimizing domestic agriculture. This strategy aims to mitigate risks associated with food imports beyond their control, potentially leading to greater cooperation in multilateral organizations to enhance resilience and responsiveness to food importers' interests.
Traditionally, the World Trade Organization has focused on trade liberalization and import barriers rather than export restrictions. However, in light of the current situation, there may be a need for a more balanced approach to address both import and export challenges in global food security.
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