“Wheat is a staple food for over 35 percent of the world’s population, and the lack of substitutability and dietary diversity will likely compound the pressure on wheat prices.”
UN Food and Agriculture Organization (FAO)
SPECIAL FEATURE
“According to the Ukraine Flash Appeal 2022 issued by the United Nations, given the scale and
direction of the ongoing hostilities, 18 million
people are projected to be affected, including up to 6.7 million projected to be newly internally displaced.”
UN Food and Agriculture Organization (FAO)
PHOTO: WFP/Deborah Nguyen
Black Sea, compounding the already high cost of fuel for maritime transportation – all costs eventually passed on to importers. The ripple effects are likely to be felt
strongest in least developed countries and low-income food-deficit countries, which rely heavily on imports and had already been struggling with high commodity prices before the war. Last year the price of rapeseed oil rose by 65 percent (further squeezed by the price of biodiesel), while the price of wheat rose by more than 30 percent. Which countries are most exposed? In 2021, Eritrea received 100 percent of its wheat supplies from Ukraine and the Russian Federation, Somalia more than 90 percent, and Lebanon almost 75 percent. Many fertilizer benchmark prices
reached all-time highs in late 2021, and some more than trebled in price over the past 12 months. In terms of fertilizer
imports, Mongolia’s dependency on the Russian Federation stood at almost 100 percent, Honduras just over 50 percent and Cameroon just under 50 percent. Meanwhile, Benin draws almost 30 percent of its fertilizer imports in roughly equal proportions from Ukraine and the Russian Federation. Feedback loops also extend through the energy sector. Agriculture directly requires large amounts of energy via gas and electricity use, as well as indirectly via fertilizers and pesticides – and the Russian Federation is a major player in the global energy market. When energy prices hit a certain level, food products (e.g. rapeseed) start to compete with energy products (e.g. biodiesel). But given the larger size of the energy market compared to the food market, a ratchet effect pulls food prices up rather than energy prices down.
FAO RECOMMENDATIONS INCLUDE:
• Keeping supply chains and international trade in food and fertilizers open to meet domestic and global demand.
• Diversifying sources of food supplies by relying on other exporting countries or on existing food stocks.
• Avoiding export restrictions, which exacerbate price volatility and limit the buffer capacity of the global market.
• Strengthening market transparency and policy dialogue to maintain trade in food and agricultural products.
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