Chew on This; Let’s Talk the Global Food Shortage
Still reeling from a pandemic, supply chain disruptions, and the first major war in Europe in decades, a global food shortage seems poised to hit us while we’re down. With Russia and Ukraine serving as Europe’s breadbasket — producing 12% of total calories traded in the world — conflict between the two nations has jeopardized global food supply by causing disruptions in exports and production of grain and fertilizers. What’s more sobering is that the food shortage was already a problem before the invasion. According to the World Food Programme, food insecurity grew 25% in 2021 relative to 2020, affecting an additional 38 million people. The additional strain placed on the global food market in 2022 from the Russian-Ukraine conflict combined with pre-existing conflict, climate disruption, and health crises could be the perfect storm for a food shortage the likes of which the world hasn’t seen since World War II.
What global conditions set the stage for this shortage to become a problem? You got it, the pandemic. In the aftermath of COVID-19, consumers have experienced lower incomes, higher living costs, and more limited availability of goods. In particular, the Wall Street Journal identified that shipping transportation, a vital element of the supply chain, underwent sharp price increases: the average price to ship a 40-foot container quadrupled between July 2021 and the year before. These supply chain issues combined with other policy and demand factors have largely contributed to the current 6 percent global inflation rate. Together, supply chain and inflation complications resulting from the pandemic sparked the initial concern for food shortages.
Russian’s invasion of Ukraine quickly escalated the issue. The US Department of Agriculture projects that the invasion will decrease wheat exports from Russia and Ukraine by 7 million metric tons this year. Additionally, outside countries’ ability to produce food will be affected by sanctions cutting Russia’s connection to the global market. These have already resulted in a 30% increase in fertilizer prices due to Russia’s position as a top fertilizer exporter. This fertilizer scarcity will greatly affect crop yield and further exacerbate the shortage.
The UN estimates that food supply issues could lead to a famine claiming the lives of over 43 million people, with areas such as Africa and the Middle East (which are highly dependent on food imports from Ukraine) predicted to be the most affected. These regions have already seen wheat flour and cooking oil prices climb 47%, and this could just be the beginning.
As pressure builds to find more effective ways to feed the world, ideas range from turning to previously unleveraged commodity sources such as India for wheat supply, to using manure as a substitute for fertilizer. Out of all these ideas, a range of sustainable alternatives to traditional food production are among the solutions FWP has been tracking, proving that there is potential to bridge the gap between the food needed to feed the world and the current chaotic and insufficient supply.
Jacob Karpenko, Intern
Africa has been one of the hardest hit areas of the food shortage with millions experiencing severe hunger. Recently, the UN provided $100M of support to six African countries and Yemen to assist with food, water, and medical resource supply.
Shifting the use of farmland from biofuel and animal feed usage to growth of human food could counteract the loss of food production in Ukraine. Aquaponics and other sustainable food production alternatives could solve both food insecurity and climate issues.
A McKinsey podcast from April does a nice job breaking down the effects of the Ukraine-Russia conflict, analyzing the risks of a global food shortage, and highlighting what solutions they think will be the most effective.
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