The world, now more complex, is facing unprecedented polycrisis, the World Trade Organization (WTO) chief has warned.
Export restrictions are pushing up food prices and could further exacerbate the global “polycrisis,” WTO Director-General Ngozi Okonjo-Iweala said at the opening of the 12th WTO ministerial conference in Geneva on Sunday.
According to the official, the world has “become more complex” since the last ministerial meeting back in 2017, given the lingering Covid-19 pandemic, Russia’s military operation in Ukraine and the ensuing food and energy crises.
“This polycrisis is really unprecedented. And what is very central to all of this is that no one country can solve this crisis on its own. This is the time that you need the world working together. You need global solidarity,” she said.
Okonjo-Iweala drew attention to export controls, which, as she repeatedly stated, should be eased in order to avoid making an already dire situation worse.
“You saw that in the 2008-2009 food crisis, just those kinds of actions [export controls] did lead to price spikes. In the food security declaration, our members are trying to speak about how they would try to restrain themselves from taking these kinds of actions. And this is a very important contribution that they can make to keep the price of food products from rising even higher,” she said.
The WTO chief noted that while international trade has helped lift some 1 billion people out of poverty, poorer nations and poorer people in well-off countries are still struggling and are often left without support while the wealthy stock up on supplies.
The official also pointed to the situation in Ukraine, which is traditionally considered one of the world’s breadbaskets but is currently unable to export its grain due to the military standoff with Russia. The WTO estimates that between 22 million and 25 million tons of grains are currently held at Ukraine’s ports. Western nations have accused Russia of blocking these exports, but Russia has repeatedly stated that it is eager to provide safe passage for the grain-laden ships through the Black Sea but that the Ukrainian army has created obstacles to this, such as the recent act of arson in the port of Mariupol, and also the fact that the areas in and around the ports have been mined.
Commenting on this situation, Okonjo-Iweala said that the UN “keeps it under control” and is in constant talks with Russia and Ukraine, as well as the EU and other entities to resolve the matter. She expressed hope that the problem with the export of grain from Ukraine would be resolved soon. Earlier, Okonjo-Iweala warned that food imports from the Black Sea region were crucial for the survival of some 35 African countries, given that Russia and Ukraine together provide 24% of global wheat supplies.
According to the official, the current WTO meeting will consider whether to lift or ease export restrictions on food in order to help alleviate pressures on countries facing a shortage of wheat, fertilizers and other products because of the crisis in Ukraine. She noted that a draft of an agreement that would relax the export measures is already being negotiated.
Global Food Catastrophe, Warns UN
Up to 181 million people in 41 countries could be hit by severe food shortages this year due to the conflict in Ukraine and its impact on grain and fertilizer exports, according to a UN report.
“Food should never be a luxury; it is a fundamental human right. And yet, this crisis may rapidly turn into a food catastrophe of global proportions,” the Crisis Response Group on Food, Energy and Finance report released on Wednesday warned.
According to the UN, the situation could deteriorate beyond 2022, with 19 million more people expected to face chronic undernourishment globally in 2023 if food exports from Russia and Ukraine continue to decline.
IMF Chief’s Warning
Earlier this week, the head of the IMF, Kristalina Georgieva, warned that the global economy is facing “its biggest test since the Second World War.” UN Secretary General Antonio Guterres said global hunger levels “are at a new high,” with the number of people facing severe food insecurity doubling in just two years, from 135 million before the pandemic to 276 million today.
Lack Of Access And Lack Of Food
“This year’s food crisis is about lack of access. Next year’s could be about lack of food,” UN Secretary-General Antonio Guterres said, adding that the number of severely food-insecure people has doubled in the past two years.
Guterres has been involved in negotiations to resume shipments of grain from the Ukrainian port of Odessa. The UN, Russia and Turkey have also been cooperating to provide unimpeded access to global markets for Russian food and fertilizers.
Kiev has also accused the Russian military of “stealing” its stockpiles of wheat amid the ongoing conflict.
Earlier this week, the UN said it was unable to verify such allegations, adding that neither the UN Secretary General’s office nor the UN World Food Programme (WFP) had any credible information on the matter.
On Wednesday evening, the Russian Defense Ministry accused Ukrainian “militants of the nationalist battalions” of deliberately setting fire to a large granary in Mariupol’s sea port while fleeing from Russian forces. The fire reportedly destroyed more than 50 thousand tons of grain.
From Grain To Sugar
Sugar prices are expected to soar due to the export restrictions imposed by a number of key producing nations seeking to tame rising domestic food prices.
The impact of the Covid-19 pandemic, which seriously undermined global supply chains, has been dramatically aggravated by the crisis in Ukraine and the subsequent sanctions imposed on Russia. The conflict between the two major grain exporters has disrupted global supplies.
A number of countries have moved to limit exports of other key commodities, putting global food security under threat, while risking further increases in the prices of agricultural products.
Kazakhstan
Kazakhstan has begun a six-month ban on white and cane sugar exports.
India
India is reportedly considering placing restrictions on sugar exports for the first time in six years to prevent a surge in domestic prices. India’s ban is expected to target around 10 million tons of this season’s exports.
Brazil
Reuters reported last week that sugar cane mills in Brazil, the world’s biggest producer and exporter of sugar, were canceling sugar export contracts and shifting production to ethanol in an attempt to take advantage of the high energy prices. The estimated cancelations could equate up to 400,000 tons of raw sugar.
Pakistan
Earlier this month, Pakistan imposed a complete ban on sugar exports, citing deep concerns about inflation. In March, Russia banned sugar exports until the end of August.
“For sugar, it is relatively easy for Brazilian mills to switch production to ethanol production if the economics make sense, and this can push global sugar markets higher,” Darin Friedrichs, founder and market research director at Sitonia Consulting, a Shanghai-based commodities analysis firm, told the South China Morning Post.
“In particular, as both food and energy prices are rising, there is increased focus on the use of food for the production of fuel,” he added.
Dong Xiaoqiang, the commercial head of AB Sugar China, said he does not expect a global shortage of sugar this year despite mounting concerns, adding that India and Thailand, the world’s second largest sugar producer and number two exporter respectively, are expected to increase their sugar output in 2022.
“What has happened recently is more a show of emotional tension over the supply of food including sugar,” Dong told the media. “Most countries that announced export bans are small sugar producers with a tight balance between supply and demand, and not many contracts have been cancelled in Brazil,” he said, while adding that prices are still expected to surge.
