NATALIA SHAGAIDA: “THE FOOD ISSUE IS VERY ACUTE"
Natalia Shagaida, Head of Agrarian Department of the Gaidar Institute, commented to “Nezavisimaya Gazeta: on the state of affairs at the global food market.
Western politicians accuse Russia of a "grain war" and rising food prices. Meanwhile, the rise in food prices began two years ago. According to the US Department of Agriculture, global wheat production in 2022 will be higher than in any year from 2016-2020. A probable decline in Ukrainian wheat exports will be more than offset by an increase in supplies from Canada, Europe and Russia, the US Agriculture Ministry said. The global rise in food prices has sparked protests in countries ranging from Iran to Indonesia and Sri Lanka.
"World wheat prices are affected by diverse and multifaceted factors. Sometimes even the fact of a local storm can raise world prices if elements of port infrastructure are destroyed in a port of large export shipments," said Natalia Shagaida.
Overall global wheat production, she says, is not a cause for concern. However, the military conflict, which has affected major grain exporters such as Russia and Ukraine, is contributing to a lot of nerve in the market and keeping prices high. "Ukraine's ports remain blocked, but Russia also has the risk of transport issues, in particular due to changes in the terms of ship insurance, the tense situation in the Black Sea. Food is not on the sanctions’ agenda against Russia because of the world situation. The situation is exacerbated because countries that used to be able to replenish funds to buy food for countries in need may face more important problems and reduce their contributions. Thus, the food issue is very acute," says Natalia Shagaida.
The rise in world wheat prices began in mid-2020, the expert recalled. In addition to the coronavirus, which has influenced structural changes in nutrition (a greater shift towards relatively cheap products, transport challenges), there have been many other reasons not related to the coronavirus. For example, China significantly raised its wheat imports. China's increase in purchases has even exceeded growth in global supply. As of today, issues associated with the sowing campaign and transportation problems in the conflict zone between Russia and Ukraine remain a very significant factor that keeps prices high, said Natalia Shagaida.
"The G7 also expressed dissatisfaction with other countries' attempts to ensure their food security. The G7, in particular, condemned India's ban on wheat exports. The G7 agriculture ministers believe such a move would exacerbate the crisis in the global grain market. Directorate General of the Indian Ministry of Foreign Trade and Industry advised on Saturday on the introduction of ban on wheat exports taking into consideration a surge in global wheat prices. However, there are signs of tension in the food market observed in other countries as well. Protests are taking place in several cities in Iran against rising food prices. The protests have been sparked by cuts in government subsidies for imported wheat resulted in a 300% increase in the price of basic products made from wheat flour. President Ebrahim Raisi's government also raised prices for vegetable oil and dairy products. The growing protests are also evidenced by disruptions to the internet and social media in Iran.
An unusual food-related crisis has also erupted in the USA. Due to doubts about the quality of infant formula, the US authorities have deprived this market of almost 40% of products.
It is good that so far Russia has not been blamed for the shortage of baby food in the USA or for the cuts in Iranian food subsidies.
"World wheat prices are affected by diverse and multifaceted factors. Sometimes even the fact of a local storm can raise world prices if elements of port infrastructure are destroyed in a port of large export shipments," said Natalia Shagaida.
Overall global wheat production, she says, is not a cause for concern. However, the military conflict, which has affected major grain exporters such as Russia and Ukraine, is contributing to a lot of nerve in the market and keeping prices high. "Ukraine's ports remain blocked, but Russia also has the risk of transport issues, in particular due to changes in the terms of ship insurance, the tense situation in the Black Sea. Food is not on the sanctions’ agenda against Russia because of the world situation. The situation is exacerbated because countries that used to be able to replenish funds to buy food for countries in need may face more important problems and reduce their contributions. Thus, the food issue is very acute," says Natalia Shagaida.
The rise in world wheat prices began in mid-2020, the expert recalled. In addition to the coronavirus, which has influenced structural changes in nutrition (a greater shift towards relatively cheap products, transport challenges), there have been many other reasons not related to the coronavirus. For example, China significantly raised its wheat imports. China's increase in purchases has even exceeded growth in global supply. As of today, issues associated with the sowing campaign and transportation problems in the conflict zone between Russia and Ukraine remain a very significant factor that keeps prices high, said Natalia Shagaida.
"The G7 also expressed dissatisfaction with other countries' attempts to ensure their food security. The G7, in particular, condemned India's ban on wheat exports. The G7 agriculture ministers believe such a move would exacerbate the crisis in the global grain market. Directorate General of the Indian Ministry of Foreign Trade and Industry advised on Saturday on the introduction of ban on wheat exports taking into consideration a surge in global wheat prices. However, there are signs of tension in the food market observed in other countries as well. Protests are taking place in several cities in Iran against rising food prices. The protests have been sparked by cuts in government subsidies for imported wheat resulted in a 300% increase in the price of basic products made from wheat flour. President Ebrahim Raisi's government also raised prices for vegetable oil and dairy products. The growing protests are also evidenced by disruptions to the internet and social media in Iran.
An unusual food-related crisis has also erupted in the USA. Due to doubts about the quality of infant formula, the US authorities have deprived this market of almost 40% of products.
It is good that so far Russia has not been blamed for the shortage of baby food in the USA or for the cuts in Iranian food subsidies.