World on the precipice of a global food shortage, war in Ukraine to aggravate crisis: UN

New York: The war in Ukraine has wreaked devastating consequences in the world. If left unchecked, the United Nations has warned of a global food crisis that could last years. To help mitigate this problem, the World Bank has announced $12bn to ease shortfall from its "devastating effects".

António Guterres, the UN secretary general stated that the issues caused by the war such as shortages of grain and fertilizer along with other factors like the pandemic, warming temperatures could "tip tens of millions of people over the edge into food insecurity".

Speaking at a UN meeting in global food security in New York, he said that there is a fear of inflation and worldwide recession due to the fall of share prices in the financial markets. He urged Russia to release Ukraine grain exports saying that the result would be "malnutrition, mass hunger and famine, in a crisis that could last for years", adding that he was constantly in communication with Russia and other counties to try and solve the problem.

Speaking about his discussion with Moscow, Ukraine, Turkey, the US, the European Union and others, he said, "The complex security, economic and financial implications require goodwill on all sides for a package deal to be reached". I will not go into details because public statements could undermine the chances of success."

Due to the invasion of Ukraine by Russian forces and the resulting international economic sanctions on Russia has disrupted the supplies of fertiliser, wheat and other commodities from both Russia and Ukraine. This has increased the prices of fuel and food, especially in the developing countries, as these warring countries produce 30% of the world's wheat.

Ukraine, prior to the invasion in February, was known as the world's bread basket that had the capability of exporting 4.5m tonnes of agricultural produce per month through its ports. This amounted to 12% of the planet's wheat, 15% of its corn and half of its sunflower oil. Currently, the ports of Odesa, Chornomorsk and others have been cut off by Russian warships forcing the supply to make a slow travel through congested land routes.

According to a report by the Guardian, the prices of commodities all over the world have gone up. In March, the UN's food and agricultural price index reached a record high of almost 160 points before dropping to 1.2 or 0.8% in April. Last year, wheat trading was at US674c per bushel in Chicago. This year because of a lack of supply among other factors, the price was almost doubled standing at US1,242c per bushel. There was also an increase in Cereal and Meat prices in March.

"Let's be clear: there is no effective solution to the food crisis without reintegrating Ukraine's food production," Guterres said. "Russia must permit the safe and secure export of grain stored in Ukrainian ports."

Antony Blinken, the US secretary of state chaired the summit. He along with David Beasley, the head of the World Food Programme called for solutions. Beasley said: "The world is on fire. We have solutions. We need to act and we need to act now."

The current crisis was further aggravated because of the soaring energy price, bringing up the cost of producing fertiliser and running farm equipment. Russia leads the world supply of certain types of fertilisers and natural gas. Although fertilisers are not among the sanctioned items by the west, their sales have been disrupted. Additionally, according to diplomats, Russia has also restricted the exports of these items.

Guterres also remarked that Russian food and fertilisers "must have full and unrestricted access to world markets".

The World Bank has announced a new funding for available projects to$30bn over the next 15 months. This funding will be helpful in boosting the production of food and fertilisers, improve trade relations and support vulnerable households and producers, according to the world Bank.

Previously, a funding of $18.7bn for various projects was announced by the World Bank for Africa and the Middle East, eastern Europe and central Asia, and south Asia, linked to "food and nutrition security issues".

The World Bank president David Malpass said, "Countries should make concerted efforts to increase the supply of energy and fertiliser, help farmers increase plantings and crop yields, and remove policies that block exports and imports, divert food to biofuel, or encourage unnecessary storage".

On Wednesday, the stocks of Wall Street fell precipitously, compelling the financial markets to reflect on the disruption to the economy that war can cause. The broadest index, the S&P500, dropped 4.04% in its worst day for nearly two years after retailers led by Target said that supply chain problems and inflation – currently 8% in the US – were eating into profits, according to the Guardian.

On Thursday, at the start of trading, there was more selling in Asia pacific. There was a 3% drop in Hang Seng, taking the index below 20,000 points for the first time in 5 years. In Tokyo, The Nikkei was off 2.5% and Seoul dropped 1.55%.

Market analyst at IG in Sydney Hebe Chen, said: "It must be said that the concern for inflation has never gone away since we stepped into 2022, however, while things haven't reached the point of no return, they are seemingly heading in the direction of 'out of control'. That, is probably the most worrying part for the market."