At the World Economic Forum in Davos, the head of the UN World Food Programme, David Beasley, warned that the global hunger crises would spread massively in the current year. “Acute hunger is reaching unprecedented levels and the global situation is getting worse.”
The situation was already tense last year due to devastating droughts due to climate change and supply bottlenecks due to the pandemic. World market prices for wheat, for example, have risen sharply since the beginning of the war. That would be a problem in itself, but Beasley predicts food shortages will also occur.
Even before the war, an estimated 44 million people in 38 countries were on the brink of acute starvation. Now another 40 million could be added by the end of the year. The number of people suffering from hunger reached a long-term high of 193 million.
Important calorie suppliers
Because of its fertile soil, Ukraine is one of the most important wheat exporters in the world. The country’s fields can or could feed 400 million people. In addition, there are high world market shares for barley, corn and sunflower oil.
According to UN figures, a good 30 million tons of maize and almost 25 million tons of wheat were harvested in 2020 alone. According to a study, Ukraine and Russia together produce twelve percent of the world’s traded calories.
A large part of this is now in danger of being canceled because a large quantity of Ukrainian grain is shipped via the Black Sea ports. Wheat went from there to Egypt, Tunisia and Morocco, Ethiopia, Yemen and Lebanon, Indonesia, Pakistan and Bangladesh last year.
These ports, especially Odessa, are blocked by the Russian armed forces. In Davos, President Volodymyr Zelenskyj called for negotiations on a corridor and release for export. Around 20 million tons of grain from the previous harvest could not be shipped at the moment, says former Ukrainian finance minister Nataliya Jaresko. The Ukrainians no longer have room in their silos. Although fields are unusable due to bombs and mines, there are said to be up to 70 percent of last year’s harvest. But if the grain cannot be stored, it will rot in the fields. Experts therefore expect a wheat shortage in 2023.
droughts and rainfall
The need would be great: China is the largest wheat producer, heavy rains have delayed sowing there. Now there are corona lockdowns. There is a heat wave in India, and there has been too little rain in the American grain belt. It is unlikely that other regions of the world will step in – because agriculture is becoming less and less profitable in view of rising fertilizer and energy prices. In many African countries, farmers can no longer afford fertilizer. The climate and environment minister of the United Arab Emirates, Mariam Mohammed Saeed Al Mheiri, called for more international cooperation in Davos.
On Wednesday, Russian Deputy Foreign Minister Andrei Rudenko said he was willing to discuss wheat exports from Ukraine. According to the Interfax agency, he called for the sanctions to be lifted. In addition, Ukraine must demin all ports. Then Russia would be ready to secure a “humanitarian passage.”
“The West will not stop Russia”
The US and the EU will not be able to dissuade Russia from the war against Ukraine with economic sanctions, says Russian economist Vladislav Inozemtsev, director of the Center for Studies on Post-Industrial Societies in Moscow. Yesterday, Thursday, he gave a lecture at the Vienna Institute for International Economic Comparisons (WIIW).
The only way to end the war is if Russia is defeated. This is easily possible due to the bad mood and the weak army. The war is not hurting Russia financially. Due to the exports and the obligation of the exporters to exchange a large part of the earnings in rubles, the Russian economy is well prepared for the situation. According to Inosemtsev, Russia’s central bank reacted very cleverly to the Western sanctions, which were surprisingly harsh for Moscow, and thus calmed the initial nervousness.
Yesterday, Thursday, the Russian central bank again lowered the key interest rate by 3.0 percentage points to 11.0 percent. It is the third rate cut in a row, with more to follow this year. The ruble has recently recovered significantly and is slightly above pre-war levels.
Economist Inosemzew expects the Russian economy to shrink by 12 to 15 percent this year. 80 percent of this decline is due to foreign companies leaving the country. As an example, he cited the automotive industry, which is heavily dependent on Western partners and components. Inozemtsev, for example, doubts that Avtovaz will be able to resume production after Renault leaves.
For some parts, the economist expects an unofficial import, for example via Turkey. In addition, Russia allowed the import of 96 goods without certification.
“No Default”
The Russian Ministry of Finance has announced that it will only pay its foreign debts in rubles. The reason for this is that the USA had deleted a corresponding exemption for debt settlement. Until recently, Moscow was allowed to access dollars stored in Russia: this exception is now ending. The debt will be paid, said Finance Minister Anton Siluanov, who dismissed the possibility of default.
Source: Nachrichten
