How Climate Change Affects Food Supply Chain Trends
OWe have enough food to feed everyone. Cereal production fell slightly, but remains higher than in recent years, according to data from the Food and Agriculture Organization of the United Nations. We are also producing more meat and dairy products compared to last year. Yet the world faces an emerging food crisis. Millions of people are already living in poverty due to soaring food prices, and as of July 12, at least 19 countries have imposed export restrictions on agricultural products in the hope of averting hunger.
As of June 30, wheat prices were up 42% from January 2021, according to the World Bank. Corn prices have increased by 47% over the same period. Most countries are experiencing food inflation above 5%, and governments are responding by trying to hedge against these shocks and stop domestic inflation by restricting exports.
Supply chain disruptions caused by COVID-19 are also partly to blame for rising food prices. The same goes for the Russian-Ukrainian war. Ukraine is a major producer of some of the world’s most vital crops – wheat, maize and sunflower – and the conflict has virtually severed its ties to the world’s food supply.
Read more: The food crisis cannot handle the war in Ukraine and climate change
Soaring food prices after Russia’s invasion of Ukraine pushed some 71.5 million more people into poverty, according to a July estimate by the United Nations Development Programme. Many of them are in countries in sub-Saharan Africa, the Balkans and the Caspian basin, where some economies, unable to produce their own food, rely solely on humanitarian rations.
Climate shocks only exacerbate these problems, says David Laborde, senior fellow at the Washington-based International Food Policy Research Institute (IFPRI). “We have strong evidence that it is also linked to climate change and global warming,” Laborde told TIME.
The increase in export restrictions is a good example. Malaysia imposed restrictions on exports of its chicken products in May because hens, in addition to facing grain shortages, tend to produce fewer eggs in extremely hot weather. The recent ban on wheat exports by India, the world’s second largest producer, came after a heat wave in March and April reduced yields. (Grain is sensitive to high temperatures and yields much less.)
Workers load wheat from a trailer at a wholesale grain market on May 19, 2022 in New Delhi, India.
Sonu Mehta/Hindustan Times via Getty Images
Several studies predict the same alarming trend for global food security: crop yields will continue to decline as the planet warms. Therefore, experts believe that as climate change worsens, not only will we see more of these export bans, but also a rearrangement of business patterns between countries, as they prioritize the interest national. Climate change is increasing the risks to food production and distribution, so countries will move towards more regional and “mini-lateral” trade deals to offset any potential damage caused by the disruptions, says Alex Capri, a researcher at the Hinrich Foundation, a philanthropic organization based in Singapore. organization that supports sustainable global trade. “Climate change is absolutely driving nationalistic behavior.”
Economies will be inclined to source important goods from neighboring countries rather than across continents, even if the latter is cheaper. This is already happening, says Capri, pointing out that “mini-lateral” agreements between strategic and geopolitical allies could be more effective in solving national food crises. The United Arab Emirates, for example, said last month that India would again export wheat, but only for Emirati consumption. The two already have an existing trade pact that cuts tariffs on all goods to increase their annual trade to $100 billion within five years.
The multiplier effect of export bans
The world has seen similar crackdowns on the food trade in past crises. Many countries imposed export restrictions on commodities to ensure domestic supplies in 2008 amid an oil shock, amid other disruptions that sparked a food crisis. More than a billion people were pushed into poverty after trade restrictions pushed global rice prices up nearly 150% that year.
The costs of imposing such measures are high. Although these restrictions may control domestic prices in the short term, farmers have less incentive to invest in agriculture, which in turn affects national food security and drives up the cost of food.
Today, the situation is much worse. In the weeks following Russia’s invasion of Ukraine, IFPRI data showed an increase in food export restrictions, with at least 23 countries issuing either outright bans export or limited export licenses to mid-July. Some countries, such as Indonesia, were only forced to ease export restrictions after protests from farmers and small producers.
Read more: Climate change is likely to devastate the global food supply. But there’s still reason to be hopeful
Crops are increasingly affected in a warming world, with more frequent heat waves, droughts and extreme floods. Laborde points out that governments do not always help farmers hit hard by weather and climate shocks, which risks pushing them out of business.
“We really need more for governments to support farmers and the food system rather than trying to basically punish farmers to protect consumers,” he told TIME.
The decline in food stocks caused by climatic shocks is also more sensitive to price fluctuations than before. “[If] we had the same type of crisis five years ago, the market would have reacted differently,” said Laborde, pointing out that since climate change is constantly reducing crop yields around the world, governments have much less room to maneuver. than before.
Solving the food price crisis
In response to increasingly protectionist measures taken by national governments on food trade, ministers from 164 World Trade Organization (WTO) countries agreed in June to ease the flow of food into global markets and to remove export restrictions for emergency food aid. WTO Director-General Ngozi Okonjo-Iweala said the deal will help make food and agricultural trade “more predictable” amid “the worst food security crisis in decades”.
Member countries have pledged not to impose restrictions on food purchased by the World Food Program in order to ensure the supply of humanitarian food aid. They also promised to notify the WTO of any export restrictions they plan to impose.
A Ukrainian soldier in his position surrounded by wheat plants near the front lines in Zaporizhzhia province, Ukraine.
Celestino Arce/NurPhoto via Getty Images
Although the WTO agreement is considered by many to be historic, it is still only a promise, as the organization has no enforcement mechanism for those who do not follow the rules. Daniel Esty, a professor of environmental law and policy at Yale University, says the WTO Secretariat is unable to do much more than convene countries. “It’s really up to national governments to step in and make sure there’s broad free trade…and that there’s a flow of food, especially to countries that have it. most needed,” he told TIME.
One of the criticisms leveled at the recent WTO agreement is that it benefits countries with large agricultural and food companies, but not small and medium food producers. Corinna Hawkes, director of the Center for Food Policy at City, University of London, said one solution would be to diversify voices in food trade policy. The private sector influences the decision-making of national leaders for food systems, but Hawkes says she thinks inviting those directly affected by the crisis into the decision-making process – small farmers, women and youth – will result in more inclusive solutions.
Whether addressing racial, gender, economic or other social inequalities, “communities can find solutions that work for them if they have the opportunity to co-design those solutions,” she said. declared to TIME.
The future of the global trading system
As geopolitics and climate change drive nations to source closer to home, there could be unintended environmental benefits.
Grain exporters like India and the United States use huge amounts of fresh water to produce enough crops to export to the rest of the world. But crops produced locally or from neighboring countries, when grown with climate-resilient technologies, such as precision agriculture, use less of this precious resource. Shorter export distances also mean less fuel consumption for transportation. Shorter supply chains improve access to stakeholders such as farmers and consumers and also lead to shared sustainability efforts.
Read more: The Ukraine crisis shows how fragile our food systems are
This shift to regional trade pacts, however, does not mean the end of globalization, say some experts. Instead, Hawkes thinks globalization and international trade are simply moving into a new phase as countries strive to diversify their food sources, including indigenous sources, for greater security.
“It seems like de-globalization — in a way, it is,” Hawkes says. “But increasingly, trade is not just about exchanging goods, but about exchanging services…finances…data. So countries will continue to use these forms of globalization to produce food in their own country.
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