Natalia Dembinskaya
While in Europe they are puzzling over how to do without Russian resources, saving gas and not turning on electricity in their homes because of huge bills, developing countries have more serious problems: there will soon be nothing to eat. The UN warns that many countries in the Middle East, Africa and Latin America are on the verge of a food disaster due to a sharp rise in food and en-ergy prices, the impending shortage of grain and fertilizers. Fuel riots in cities. Problem regions are covered by a “hungry hurricane”, economists are waiting for a repeat of the “Arab spring”.
Forced measures
Over the past two years, products have already risen in price due to the pandemic and logistical failures. The energy crisis in Europe and anti-Russian sanctions have exacerbated the situation. Oil now costs nearly 60 percent more than a year ago, and coal and natural gas prices are at record highs.
As the Food and Agriculture Organization of the United Nations (FAO) notes, the world has not seen this since 1990. Vegetable and butter, cereals, meat, sugar, dairy products, including powdered milk, are becoming less and less available.
In mid-March, Russia banned the export of grains (wheat, rye, barley and corn) to the states of the Eurasian Economic Union (EAEU) until June 30, as well as white sugar and raw cane sugar to third countries until August 31. This is necessary to protect the domestic market in the face of unprecedented external restrictions.
Moscow did not leave its allies in the EAEU without support: they will be given quotas for grain. Everyone will take advantage of this, except for Kazakhstan, which will have enough of its own harvest. The rema-ining regular buyers may be seriously affected – amid fears of a shortage, wheat has already doubled in price, to 400 euros per ton.
As Bloomberg notes, problems arose just at the moment when world reser-ves were depleted. Chicago futures have soared 46 percent since the start of the year, hitting major importers from the Middle East and North Africa.
International companies are severing long-standing business ties and leaving Russia, hence the supply disruptions. Here is just one example: the European Union has banned cooperation with the Novorossiysk Commercial Sea Port, where more than half of the exported grain is shipped.
Bread Crisis
What is happening is seriously undermining the food security of a number of the poorest countries. Russia is the world’s largest exporter of wheat, Ukraine, which has suspended sales, is in fifth place. Together, Moscow and Kyiv provided 19 percent of global supplies of barley, 14 percent of wheat, four percent of corn, and 52 percent of sunflower oil.
Particularly worrisome in civil war-torn Yemen, w-hich is completely dependent on Russian and Ukrainian wheat. The grain crisis hit Egypt and Leban-on hard, where Moscow and Kyiv met the demand for wheat by 80 percent.
In Lebanon, there are already all the signs of a grain crisis: wheat is sold strictly on ration cards and only for baking, huge queues line up in front of bakeries. According to Economy Minister Amin Salam, the authorities will allocate $15 million to solve the problem. However, this is only enough for a few weeks.
Amid rumors that the government’s bread subsidy line of credit will be cancelled, Lebanese have swept away all stocks, Reuters reported. Now they are waiting for 150 million dollars from the World Bank. The authorities admit that otherwise “they won’t be able to subsidize anything, let alone bread.”
And it’s not just the loss of direct Russian imports. As noted by the International Food Policy Research Institute (IFPRI), countries in the Middle East and North Africa are re-exporting flour and other wheat products, which supports their budgets.
In Africa, about 300 million people were already starving. The trade turnover of the Black Continent with Russia is four billion dollars, and this is 90 percent wheat. The supply chaos caused by sanctions and logistical problems has significantly increased the risk of a “full-scale famine” in the region.
Left without a harvest
Many will have to sit on a meager ration because of the lack of fertilizers. Russia is in the top three suppliers of urea, ammonia, ammonium nitrate, which are critical for agriculture. This did not prevent the European Union from restricting imports. The United States, on the contrary, hastened to withdraw this category from restrictions as “essential goods.”
And now in Europe they are afraid to get a harvest half as much – with a corresponding rise in the price of products. But if the “rich” can afford to pay more for food, the “poor” have nowhere to get money.
“NATO aggression agai-nst Russia on Ukrainian territory is turning into difficulties with the production and supply of fertilizers and some food products,” said Julio Chavez, deputy of the National Assembly of Venezuela.
Everyone will feel the consequences: Western and Eastern Europe, Latin Am-erica, South and Southeast Asia. It is extremely difficult, if not impossible, to replace Russian fertilizers, the Ministry of Industry and Trade pointed out. Peru, for example, declared a state of emergency in agriculture.
“The impact of the geopolitical crisis will be most noticeable in the poorest countries. Fully dependent on Russian wheat, Benin, Sudan – by 70 percent, Egypt, Madagascar, Rwanda, Tanzania – by more than 60 percent. Trade within Africa will not allow to replace imports from Russia and Ukraine, especially in the face of further growth in prices for fertilizers: by the end of 2021, two main components of fertilizers – urea and phosphates – have already risen in price by 30 and 4 percent, respectively. In addition, due to the closure of airspace, transportation costs are increasing,” points out Ekaterina Bezsmertnaya , Dean of the Faculty of Economics and Business of the Financial University under the Government of the Russian Federation.
But the Muslim world celebrates the holy month of Ramadan. Economists are waiting for social unrest and do not rule out a new “Arab spring”. In the poor countries of North Africa, Pakistan, Yemen, Afghanistan, Syria and Libya, the population spends almost everything they earn on food. And the rise in prices is blamed not on the distant West, but on their own governments.
The French Le Figaro re-calls: problems with wheat in 2007 provoked food riots in 37 countries, which resu-lted in the “Arab Spring”. But if then wheat cost 240 euros per ton, now it is 400. And this is not the limit.
Fuel riots
In Latin America, there are already mass protests. In Peru, a liter of gasoline has risen in price by 37 percent, Uruguay – by 33, Brazil – by 26, in Argentina and Chile – by 15 and ten. A possible oil embargo from Russia threatens the region with a fuel shock.
Peru is in a fuel riot. Farmers and truckers blocked highways. The strike of transport unions turned into nationwide riots and attacks on government buildings. All this, economists warn, is a harbinger of a massive economic and political crisis in Latin America.
In Honduras, truckers have also blocked major roads, demanding higher transport rates and subsidies from the state. Paraguay is also restless: truckers went on strike, and when there were shortages of groceries in stores, the rest took to the streets.
Due to mass protests, the government of Sri Lanka has already resigned, the opposition almost overthrew the president. The authorities announced an “attempted coup d’état according to the scenario of the” Arab Spring “and declared a default on external obligations. The island state, whose economy is almost entirely dependent on tourism, has exhausted its foreign exchange reserves. There is nothing to pay for basic imported goods, including energy. As a result, a catastrophic shortage and hour-long queues for fuel.
While the West is imposing one after another a package of tough sanctions against Russia, the UN is waiting for a further increase in food prices – up to 20 percent. For many emerging markets, this is fatal. Economists at the University of Bonn estimate that the suspension of Russian exports threatens to starve hundreds of millions of people. And the global food market will overcome the consequences of the commodity and logistics crisis for at least the entire next year.
