Wheat frequently takes center stage when the imminent global food crisis is highlighted. There are several explanations for this.
“Only seven nations account for 86 percent of worldwide wheat exports, with only three holding roughly 68 percent of global wheat reserves, and some of the world’s most vulnerable and destitute countries dependent on them for more than half of their wheat imports.”
Russia and Ukraine account for more than 25% of global wheat exports
Consequences of the war
“Before the Russian invasion, Ukraine was seen as the world’s breadbasket, exporting 4.5 million tonnes of agricultural produce per month through its ports, accounting for 12 percent of the planet’s wheat, 15 percent of its corn and half of its sunflower oil. But with the ports of Odesa, Chornomorske and others cut off from the world by Russian warships, the grain supply can only travel on Ukraine’s congested land routes that are far less efficient.”
The FAO food price index and ammonia fertiliser prices are exploding as a consequence
“The lack of Ukrainian grain is pushing food prices up and pressing countries already facing shortages toward famine. Leaders at Davos emphasized the link between the blockaded ports of Odesa and the millions of people threatened with starvation in countries like Afghanistan, Haiti, Lebanon, Somalia and beyond.”
The role of India
“This year, the situation is even more critical and all eyes are on India. The South Asian country is currently dealing with a record-breaking heatwave that is harming food crops – with wheat yields falling by nearly half in the worst-affected areas – and heavily impacting the already precarious economy. When discussions about a potential wheat shortage amid Russia’s invasion of Ukraine began in March 2022, Prime Minister Narendra Modi announced that the country would step in and seize the gap left by the war in the wheat export market.”
Who is most affected by all of this ?
“The precarious situation, combined with the effects of the coronavirus pandemic that are still largely felt around the world, could further deteriorate conditions, with the UN warning that an additional 7.6 to 13.1 million people could go hungry as the war continues, jumping from the current 276 million to more than 323 million people.”
“Compared to energy price shocks, food price inflation tends actually to be more pervasive and prolonged in its impact, and governments typically have fewer administrative programs to buffer the effects on households,” said Bryan Carter, head of emerging-market debt in London at HSBC Asset Management. His team is cautious on the bond markets of Nigeria, India, Kazakhstan, Egypt and Pakistan due to their large food inflation components and has ratcheted up expectations for emerging-market inflation in most countries. (https://www.deccanherald.com/international/world-news-politics/pay-debt-or-feed-people-is-hungry-nations-impossible-choice-1113732.html)