The global food market: a model under review
The meteorologist and mathematician Edward Lorenz said that very small variations that at first glance may seem innocuous, can generate enormous changes over time. He called it the butterfly effect. This metaphor illustrates the seriousness of the extreme interdependence that exists today between economic spaces, thanks to which an apparently simple decision or a situation in a certain remote part of the planet is enough to trigger an effect that will affect millions of people in many other parts of the world.
That small variation may be a gust of gale-force winds capable of running a ship aground; it may be a bad harvest in a particular part of Africa or the outbreak of an uncertain war at one end of old Europe. Yes, so vulnerable are our supply chains that it took only six days with the Suez Canal impassable to wipe out price stability and product availability. So vulnerable that the invasion of Ukraine has disrupted trade in grains and oilseeds and put global food security in jeopardy.
The interdependence of our food systems
Globalisation, the phenomenon that the international economy began to experience after the fall of the Berlin Wall, has led to an extraordinary increase in interdependence on a planetary scale. In industry, mining or food. And while it is true that there were voices demanding food sovereignty for all, today we discover almost all at once that our food systems are very fragile. We find that any small incident, no matter how distant, can be reflected in the price of our shopping basket and the contents of our plate of food.
When a system is composed of hundreds of interconnected activities and involves several people, vulnerability increases. Because when we talk about food supply chains, we are not only talking about farmers, food processors and distributors, but also about logistics, customs and transport services.
As in any other sector, the efficiency of the food supply chain depends on the overall performance of its key players. And because they are all interconnected, the decisions of one group have repercussions for the others. This means that a disruption in any segment of the supply chain rarely stays in that segment and is very likely to spread and affect other segments upstream and downstream.
COVID-19: global food trade in jeopardy
During the height of the COVID-19 pandemic, the movement of food was particularly affected by confinement measures around the globe. In the first instance, there was a clear decrease in demand for some products and an increase in demand and prices for others. Ultimately, the situation led to increased food insecurity and extreme vulnerability of those exporting their crops to distant countries, especially producers of fruits, vegetables and other perishable foods.
Despite the general relaxation, new pandemic disturbances continue to emerge to this day. China, for example, is taking very restrictive measures that have led to the standstill of the port of Shanghai and a huge impact on land transport. Consequences? Reduced availability of products, increased prices and huge food loss figures. Far from there, especially in Africa, COVID joined political conflicts, the economic crisis and the climate crisis in a lethal cocktail. According to FAO, Ethiopia, Nigeria, South Sudan and Yemen have already become “hunger hotspots”. This new label designates countries where part of the population is likely to face a significant deterioration in food insecurity in the coming months, putting their lives and livelihoods at risk.
All this data leads us to conclude that, until we build more sustainable and resilient global food systems, we will be leaving it all to chance. Because COVID will not be the last threat.
War in Ukraine: the threat that does not stop
The conflict between Ukraine and Russia appears on the map as a new threat to global food security. These two countries are the world’s leading exporters of barley, wheat and corn, accounting for more than one-third of global grain exports. With the war, exports have ceased. The grain is either trapped or will not be produced.
This means that Kenya will not get enough food because, in addition to the worrying drought in its fields, the country is heavily dependent on wheat imports from Russia and Ukraine. Countries such as Armenia, Mongolia, Kazakhstan and Eritrea, which used to import almost all their wheat from the two warring countries, must also find new sources of grain.
All of them, in this search, will be forced to compete with countries whose purchasing capacity is much greater, such as Turkey, Egypt, Bangladesh and Iran. Or China, which is also going to turn to world markets to buy grain because last year’s floods affected its crops. And the shock wave continues.
Another problem caused by the war is in fertilizers, since Russia and Belarus were until now the countries that supplied large territories. Faced with shortages, some countries with high rates of food insecurity, such as Mexico and Brazil, are looking for new suppliers. But this means paying higher prices or fertilizing less and obtaining lower yields. In any case, the result is similar: price increases in the food produced.
The goal of food self-sufficiency
Transportation, droughts or wars are at the apparent origin of the problem. However, the whole situation requires us to reflect: Is it sensible to make the food of entire communities dependent on what happens on the other side of the world? How can we reduce the risk? How can we avoid tensions in the food supply chain? The conclusion seems clear to experts or simple observers: we need to shorten these chains and install systems that are equipped with resilience.
According to FAO, in order to achieve these resilient systems, we will have to work in two areas: to seek formulas to reduce the margins of dependence on the outside world and to support family farming. Only in this way will we be closer to a food system capable of coping with shocks.
What is most interesting about all this is that, in addition to preserving food security, a resilient system will also be able to safeguard the livelihoods of all people in the supply chains and will be able to ensure access to nutritious, safe and sustainable food.
The international organisation has been raising the issue for years and is looking for ways to promote social debate on this topic. It seems that it is only now that the public realises that it is not a good idea to depend on food that is produced thousands of kilometres away and that, in the face of a restriction of movement, stops reaching the supermarket, rises in price or, as is the case now, ceases to be produced.
To learn more:
- The impact of the war in Ukraine on global food security. FAO.
- The effects of COVID-19 on food security and nutrition. Committee on World Food Security.