Russia’s aggression in Ukraine will have “severe” effects on the world economy, the International Monetary Fund alert Saturday. Grain and fuel prices have surged to historic peaks. This seems like an awkward time to offer hope. Yet hope remains.
Our world is much more resilient than it was even a generation ago, especially with regard to food. The food shock of 2022 is not a good-news story. The news is bad. But our “bad” is less bad than ever before.
Russia and Ukraine are massive growers of grain, especially wheat. Russia produces about 10 percent of the planet’s wheat; Ukraine about 4 percent. Some of that production is consumed at home, but after their domestic use, Russia and Ukraine together provide about one-quarter of all the planet’s wheat exports. They are important exporters of corn and barley as well, and of cooking oils, especially sunflower oil. Now the Russian invasion has closed the ports through which Ukraine’s wheat moved to world markets. Insurance costs have jumped for all shipping in the Black Sea. Spring crops will probably go unplanted in Ukraine; Russian crops face sanctions and embargo. Russia and its ally Belarus also are—or were—important exporters of the fertilizer that other food-raising countries use to grow their own crops.
The upheaval will touch every consumer food on Earth, even those living in food-secure countries such as the United States. Food prices are set in efficient global markets. All countries face similar prices, whether they are sellers into those markets or buyers from those markets. If the price goes up for anyone, it goes up for everyone.
Again: Sudden increases in global food prices are not good news. But also again: Some context is necessary. Four points of context, actually.
1. We live in an age of food abundance.
Maybe you retain some memory of old predictions about global famine? A best-selling book published in 1967 carries the lurid title Famine 1975! America’s Decision: Who Will Survive?Among other predictions, the authors identified India as the nation most inevitably doomed to mass starvation and economic collapse.
So … guess which country is the world’s second-largest producer of wheat in 2022, accounting for more than 13 percent of all output? That’s right, the former alleged basket case India. Since the 1960s, Indian wheat production has increased by nearly an order of magnitude, to almost 110 million metric tons last year. Indian wheat exports will probably exceed 7 million metric tons this year, up from the previous peak of 6.5 million in 2012–13.
India also exported nearly 18 million metric tons of rice in the 2020–21 marketing season, more than any other country. That’s impressive, but not as dazzling as the performance of Vietnam, which has vaulted from exporting basically nothing as recently as 1989 to second place among rice exporters in the 2020s. (The United States ranks fifth.)
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2. Many food-importing countries can cope.
The world’s largest wheat importer is Egypt. I spoke with Mirette Mabrouk, the director of the Egypt Program at the Middle East Institute, in Washington, DC Based on my conversation with her, I’d characterize the food outlook for Egypt as serious but not critical. Egyptian authorities estimate that their reserves will be sufficient for at least the next six months, perhaps the next nine. Egyptian governments have been in the business of managing food reserves for 5,000 years. From the days of Joseph’s storehouses to now, they have accumulated some considerable management capacity.
Egypt buys wheat through a system of reverse auctions: posting a tender for a certain quantity, then accepting the lowest bid for that tender. Since the era of Gamal Abdel Nasser, Egypt has operated a system of subsidized bakeries that sell low-priced loaves to qualified buyers. More recently, Egypt has begun to convert to direct cash assistance provided through cards that function very much like American electronic-benefits-transfer cards. In a crisis, the Egyptian government can effectively provide more cash assistance to low-income buyers.
This is not to minimize the shock Egypt is facing as the price of wheat rises from a familiar $250 or $300 a metric ton to $500 a metric ton. It is to emphasize that the shock will land on state finances as much as or more than on the Egyptian poor.
Many other major wheat-importing countries are either rich (Italy, Japan, South Korea) or led by reasonably effective governments (Indonesia, Morocco, Turkey) that can emulate Egypt and deliver assistance to the hard-pressed. The countries to worry most about are those wracked by war and political instability: Yemen above all, but also Ethiopia, Mali, and other disrupted states.
3. Global emergency aid can help.
Where famine does threaten, the international community can save lives. In 2021, international relief agencies provided in-kind or cash food assistance to 13 million Yemenis. Such programs will cost more in 2022, but not impossibly more. Before the war in Ukraine, the United Nations’ food program projected a Yemen aid budget of $2 billion for this year. That number will likely go up by 25 percent or more, but the money can be found.
An even more terrifying food crisis faces Afghanistan under its new Taliban rulers. The Taliban’s self-imposed international isolation has been followed by a cruel drought. Millions of lives are at risk. India has committed considerable food aid. The war in Ukraine does not make feeding Afghanistan’s population easier, obviously, but it’s only a very incidental aggravating factor. Afghanistan’s agony would be no less agonizing if Vladimir Putin had decided peace in Ukraine rather than war.
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4. High prices are not bad news for everybody.
Higher prices for food consumers mean higher incomes for food producers. In most of the world, consumers hugely outnumber producers. There is one region, however, where producers remain so numerous that higher prices can improve the livelihoods of millions: sub-Saharan Africa.
About two-thirds of sub-Saharan Africans farm for a living. When prices rise, farmers produce more and earn more. Sub-Saharan farmers could produce a lot more. African farmers could soon double or even triple their output of grains, livestock, and other products if they use more intense farming methods, the economic-consulting firm McKinsey estimates.
Higher prices could encourage African farmers to adopt more advanced seeds and other modern methods. They could prod governments to invest more in rail and roads in order to move crops to market, and to clarify property laws in order to support commercial farms that produce for the international marketplace. Sub-Saharan food output grew twice as fast from 2000 to 2018 as it did in the 1980–99 stretch. That boom was driven by higher food prices, especially in the peak years of 2006 to 2013, according to a 2021 study.
African agriculture can be extended as well as intensified. The South African agricultural economist Wandile Sihlobo calculates that 60 percent of the world’s remaining unused arable land is located in sub-Saharan Africa.
Higher food prices will be a stress and a burden for hundreds of millions of people all over the world. Higher food prices will test the stability of governments. Higher food prices may become an important part of Russia’s anti-Ukraine propaganda, which will blame Ukrainian resistance to Russian aggression—and Western sanctions against Russia—for the higher cost of food.
But a stress is not a crisis, and a crisis does not have to be a catastrophe. Good management can mitigate the stress, and begin to identify and capture opportunities. Dealing with the food-price increases that this conflict will bring will not be easy. But it can be done.