This commentary was first published on ECDPM on 14 March 2022.
The pitfalls of food import dependency
Ukraine, ranking first in Europe in terms of arable land, is a global agricultural powerhouse. Together, Russia and Ukraine supply approximately 30% of globally traded wheat, and Ukraine accounts for 16% of global corn exports. Arab countries like Egypt, Tunisia and Algeria are heavily dependent on wheat coming from Ukraine. For instance, between 2009 and 2017, Tunisia’s cereal import dependency was more than 60 percent, with the bulk coming from Ukraine. Egypt, the world’s biggest wheat importer, buys up to 85% of its wheat from Russia and Ukraine and bread subsidies currently eat up 2% of the government’s budget.
In a short period of time, the war in Ukraine has caused food shortages and a rise in food prices on international markets: wheat prices soared 50% in the past month to the highest level in 14 years. Moreover, the majority of exports go through Odessa and other ports on the Black Sea, which are now closed to commercial shipping. Plus, the conflict will probably disrupt planting for 2022 in large parts of Ukraine.
On top of that, climate change continues to impact the production of cereals in other parts of the world: in China, rare and heavy rainfall in winter 2021 has delayed the planting of approximately one third of land used for wheat. And exceptional drought has led to reduced yields in Morocco this year, forcing the government to increase bread subsidies and boost import. As a result, global wheat markets were already very tight before the war in Ukraine.
Food system vulnerability
There are similarities with the food price crisis of the late 2000s, when cereal prices spiked, leading to a Russian export ban and eventually to food riots in Egypt. Unfortunately, the current situation is even worse: unlike then, we do not go into this crisis with record harvests. Rather, just before the Ukraine war, food prices were already very high and supply low, with subpar harvests in China, Canada, and Latin America. On top of this, transport and food production costs are higher because of the high prices of oil and gas. And, inflation was already rampant in many Arab countries.
As expected, poor countries which import much wheat are particularly squeezed between high wheat prices and a limited purse. In North Africa, national markets and trade systems are often strongly geared towards the export of agricultural goods, such as olive oil, while being dependent on imports for their basic staple food. Years of negligence of agricultural livelihoods in remote parts of these countries have all contributed to limited national food self-sufficiency, making these countries highly vulnerable to international market shocks.
How Europe can deal with risk cascades
Europe plays a key role in building resilient food systems, domestically and elsewhere. But what the war in Ukraine shows is that responses must go beyond supply chain or trade policies. They must be integrated into a wider policy mix, including finance, development, emergency response and security.
It is in the EU’s own geopolitical interest that its sanctions on Russia do not come with high costs for African countries. To avoid alienating the African continent, the EU can step up funding of the World Food Programme (WFP). The price for food aid has gone up due to higher food prices and transport costs, at a time when the world faces unprecedented hunger. More importantly, EU member states should not enact export bans on food. Already, Hungary is banning export of all grain, making it cheaper for its own citizens but creating a beggar-thy-neighbour dynamic that will further increase food prices.
Concretely, national governments and the EU should act fast while learning lessons for the longer term. In the very short run, countries can release their strategic food reserves. Egypt, for example, has stocks which cover the next six to nine months of consumption. Another way is for the EU to strengthen development and humanitarian assistance to poorer families to cover the increased cost of food. Even though public budgets were already strained by COVID-19 and inflation, malnutrition can have long-term consequences with vast costs for public finances in the future.
Rethinking food systems
In the longer term, the war in Ukraine can help rethink how to make our food systems more resilient, with different lessons for Africa and the EU. Strong population growth and changing diets will make North Africa as well as Sub-Saharan Africa, even under the best scenarios, more dependent on the international markets for its food needs. These international markets are expected to be more volatile, not necessarily because of war, but climate change. More regional trade, heavy improvements in productivity, healthier diets and more efficient value chains can go a long way to lessen dependence on the international markets for Africa.
The EU already has a strategy to make its food system more sustainable and resilient, namely the Farm to Fork Strategy. Changing diets is crucial to make the strategy work, and would have an impact in the current crisis as well: more than 2/3rds of EU’s cereals feed animals, not humans. But so far, the EU has not discussed or presented the plans to support such a change. Strong vested interests and political anxiety are some of the reasons why there is still a bit of a taboo around steering people’s diets. But without these changes, the Farm to Fork can also have unintended consequences for African food systems, adding to rising food prices.
The Russian invasion of Ukraine serves as a reminder for North Africa that too much reliance on food imports from a small set of countries has far reaching repercussions when there are international food shocks. At the same time, if the EU does not want to contribute to the instability in its Southern neighbourhood, it should incorporate their needs in its reaction to the conflict. But the crisis also shows the costs of inaction, for not making European and North African food systems more sustainable and resilient. The next food crisis might come due to climate change, rather than war. To prepare for this, we need to revisit how we grow, trade and eat, both in the EU and in North Africa.
The views are those of the author and not necessarily those of ECDPM.
Photo courtesy of Bence Balla-Schottner via Unsplash.
