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LATEST NEWS UPDATES | Waging war for sustenance -Aunindyo Chakravarty

Waging war for sustenance -Aunindyo Chakravarty

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published Published on Apr 16, 2022   modified Modified on Apr 19, 2022

-The Tribune

Disruption in supplies due to Ukraine crisis may create food shortage, price distortions

The war in Ukraine has become a war on the world’s poor. Russia and Ukraine, together, accounted for a quarter of the world’s wheat exports, one-sixth of global corn exports, nearly a third of barley and three-fourths of the export of sunflower oil. American sanctions on Russia mean it cannot sell its extra wheat in the global market, while Ukraine doesn’t have enough able-bodied farm workers to either harvest or sow crops. On top of this, China, the world’s biggest producer and consumer of wheat, is expecting a terrible crop this season, thanks to widespread flooding in wheat-producing areas. That means the world’s most populous country will be looking to buy more wheat from the global market, at a time when war has disrupted supplies.

If Indian governments had listened to free market-loving economists and pink-paper pundits, we might have ended up with food riots, runaway inflation and a bankrupt fisc.

Normally, this would have been good news for farmers across the world, since they would stand to gain from high food prices. But Russia’s invasion of Ukraine has increased their input costs dramatically. First, it was the price of fuel, needed not just to power tractors, harvesters and pumps, but also to lug their produce to the market. Then came the disruption of fertiliser exports from Russia and Belarus, which supply one-fifth of the world’s fertilisers. The result has been a sharp rise in fertiliser prices.

None of these disruptions will disappear overnight, even if Russia withdraws from Ukraine and the West lifts its sanctions on Russian exports. By the time things ease, the agricultural season would have ended in most parts of the world. Ukraine will not be able to magically grow wheat and sunflower seeds. Farmers in Brazil, who have cut back on output because of high fertiliser prices, will not suddenly grow more over a weekend. So, the food shortages and price distortions are here to stay for at least most of 2022.

The worst hit will be countries in Africa and the Middle-East, which are heavily dependent on wheat imports. Egypt is a prime example, where two-thirds of the population lives on heavily subsidised aish baladi (‘bread of life’), a round flat-bread. Each person is entitled to five pieces, every day, for one-tenth of what it costs the bakeries to make them. The Egyptian government compensates the bakeries for their losses. The trouble is that Egypt imports more than three-fourths of the wheat it consumes. Its bread-subsidy scheme — a lifeline for its poor — is a massive fiscal drain, and higher global wheat prices are threatening to bankrupt it.

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The Tribune, 16 April, 2022, https://www.tribuneindia.com/news/comment/waging-war-for-sustenance-386637?fbclid=IwAR1CWo3NA3lhYb3VHf5DR5cYz_3tOaIlL9qtkQb80KPHOU1cE3nFuGrYCGs


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