«We must rid humanity of food shortages in this generation»
Wheat prices skyrocketed to a four-month high. All because of the fears of market participants: they are afraid of a complete stop in the supply of grain to the world market due to current geopolitical difficulties. Over the past month, wheat has already risen in price by 29% — this is the highest increase since 2015, Bloomberg notes. Meanwhile, Moscow is considering withdrawing from a grain deal designed to stabilize grain prices and help people in needy countries get food without hindrance. What will happen next with the global food market? What types of food can rise in price in the near future? Why won't food cards for the poor be introduced in Russia? Oleg Kobyakov, director of the Moscow branch of the Food and Agriculture Organization of the United Nations (FAO), spoke about this in an exclusive interview with MK.
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Due to the events in Ukraine, as well as large-scale sanctions imposed by the West against Russia, global grain supplies were disrupted, which increased the severity of the food crisis in several countries of the world. The so-called grain deal was called to correct the situation. The agreement provided for the creation of safe sea corridors for the export of Ukrainian grain under the supervision of observers from Turkey and the UN.
However, not all countries and members of the expert community shared the official position. Many still believe that the provisions of the document are not aimed at helping the poorest countries and stabilizing the world wheat market. Thus, the Kremlin recently thought about withdrawing from the grain deal, as they do not see “special prospects”, since the entire Russian part of the agreement is not being implemented. This was stated by the press secretary of the President Dmitry Peskov.
— The UN, through its Secretary General António Guterres and Deputy Secretary General for Humanitarian Affairs Martin Griffiths, has repeatedly spoken out about the grain deal. This agreement was concluded with the help of the «big» UN, that is, directly from New York. Geneva is also dealing with this issue, represented by the Director General of the UN Conference on Trade and Development, Rebecca Greenspan. FAO is not a «procedural entity» here. Yes, our statistics on grain production and trade are used, but here the position of the FAO does not differ from the position of the UN. The agreement contributes to the stabilization of the world food market, the predictability of supplies, as well as food prices. Of course, we express the hope, as an organization that is responsible for nutrition and food on a global scale, that this set of agreements will once again be extended for a new period (currently the deal is valid until July 17 — ). This will allow markets to behave more calmly, and consumers in all countries — importers of both Russian and Ukrainian food — to feel more confident.
Photo: roscongress.org
— I have not seen such information that the grain deal allegedly provoked a rise in prices. And the statistics say otherwise. Grain prices have continued to decline for almost a year now. In May 2023, in general, grain prices fell by more than 6% (according to the FAO Food Price Index). The cost of corn fell by almost 9%, barley — by 8%. This suggests that the grain deal is having a stabilizing effect on the global food market. But it must be remembered that less than 20% of the grown grains are sold through international trade channels, the rest is consumed within the producing countries. Of this volume (20%), Russian and Ukrainian combined exports account for about 10%, but nevertheless, on a global scale, this is a large amount. The issues of stability of these deliveries have a significant impact on the world grain market.
—Russia, under conditions of restrictions, finds new sales markets. There are countries that are interested in importing Russian wheat and other food groups. In general, one cannot speak of a reduction in Russian grain exports over the past trading year.
— The basis of the world consumer basket is grain. And since grain is, in addition to food for people, also fodder for livestock and poultry, the rise in grain prices entails an increase in prices for meat, dairy products, and vegetable oils. In fact, for all product groups. However, the highest prices were only in April 2022, since then they have been declining. According to the latest statistics that we have (for May 2023), prices have decreased for grains, vegetable oils and dairy products. Slightly, about 1%, increased the price of meat, as well as sugar, but this is not related to the situation in Ukraine. This is a global situation. If we talk about the dynamics of Russian prices, their growth has also slowed down. With regard specifically to cereals, it should be taken into account that large reserves have been accumulated in the world. Many countries have accumulated reserves that cannot be stored indefinitely and must be sold. Therefore, the dynamics in the market of grains and vegetable oils is very positive.
— In Russia, as you know, there was an increase in inflation. It hit double digits last year. This year the result is predicted — 4-5%. Food prices have risen, as they have all over the world, but now their growth has slowed down. The cost of products is positively affected, in particular, by the seasonal factor. Now for the grain. In total, taking into account the climatic conditions and last year's super-harvest, which has yet to be sold, the sown area has decreased somewhat. Weather conditions this year are less favorable: in many regions late spring and summer, somewhere the crops were destroyed by hail. In general, forecasts for the grain harvest are about 120 million tons, which exceeds both domestic and export needs in excess.
— A number of countries are able to fully provide for themselves. For example, the USA, Canada, where a significant increase in area is possible this season: there are capacities, seeds, and fertilizers. Many European countries can also boast of being self-sufficient. Another thing is that the price of production there is very high, the cost per unit of production is higher than in the same USA, Canada, Brazil. Therefore, it is often cheaper for European countries to buy grain than to produce it themselves. It cannot be said that some new trader has now entered the grain market. Most likely, we can talk about the disposal of reserves. Last year, some countries withheld export deliveries to accumulate these reserves. Today the situation for wheat, corn, soybeans is more favorable. Problems are observed with rice. Climate-wise, forecasts for the rice harvest this year are less favorable. Countries such as India and Vietnam are holding back rice supplies. For grains, the only thing that is growing now is the price of rice.
“Even in the most developed countries, there is a significant proportion of the population that does not have enough income to feed themselves and their families. Helping these citizens is a social function of the state. How and in what form is irrelevant. This could be cash benefits, food stamps, or food stamps. But ration cards are the most advanced form to date. To control the intended use, you can limit the list of products that can be paid for with them (without alcohol and tobacco, for example).
— The food crisis on the planet has been observed for more than a year. The situation when every tenth of its inhabitants goes hungry (828 million people in 2021), being uncertain that they will get their daily bread tomorrow, is unacceptable. In general, in order not to lose optimism, favorable conditions are needed: cooperation of all states, reduction of armed conflicts and preventing the growth of new ones, solving the problem of climate change, as well as stabilizing the financial and economic system. But so far there are no big reasons for optimism. Hunger is reduced only due to the fact that population growth outstrips it, and those who live poorly continue to live poorly.
Nevertheless, the goal of eliminating world hunger by 2030, set by the UN, is not removed. We must do everything in these remaining years to “level our boat”, so that in the next period we will finally save humanity from hunger during the lifetime of this generation.