wheat futures prices are up 60 so far
this year and after a heat wave damaged
crops in india the country announced
last week an immediate ban on wheat
exports the indian government said that
a spike in prices is threatening the
security of a vital commodity both for
india and for other vulnerable countries
india is the world's second biggest
wheat producer after china thanks in
part to a bumper harvest last year they
had been able to fill the gap in markets
left by decreased output from ukraine
even as bad weather reduced the crops of
the other big grain exporters in the
global food system supply demand
problems were previously mostly down to
weather and other supply-related factors
in the last few years the global
pandemic tested and in many ways proved
the resilience of the global food supply
system but now with the war in ukraine
we're seeing severe problems in the
global food supply chain and it's
difficult to predict the medium or
long-term implications these new issues
are occurring on top of an already tight
but at least functional food supply
chain before the war in ukraine food
prices had already risen 18
over the pandemic
globally there are six bread basket
countries that together supply roughly
two-thirds of global agricultural
commodities ukraine has long been one of
the most important of these countries
producing food not just for its own
population but for people around the
world additionally ukraine produces a
lot of fertilizer
57
of the land in ukraine was used for
growing crops in 2019 making it one of
the most highly cultivated countries in
the world by comparison in the same year
the united states actively used 17
of its land for cultivation
ukraine accounts for 30 of the world's
supply of sunflower oil widely used in
food production and grows four percent
of the world's wheat while four percent
may not sound like a huge number the
fact that they produce much more than
they consume means that ukraine accounts
for around 10 of global wheat exports 13
of corn exports and is the world's
largest producer of sunflower oil
normally the country exports 40 million
to 50 million tons of cereals every year
but russia's invasion meant export
volumes in march were a quarter of those
in february the black soil in ukraine is
unusually fertile its farmland is
cheaper to run than that in europe and
the united states
the country has deep sea ports that give
it easy access to international markets
this combination has allowed ukraine to
become a key exporter of agricultural
commodities and to be described as the
bread basket of europe
china is another important bread basket
food produced by china makes up around
20 percent of total world exports the
zero covet policy being enforced in
china means that many farmers there are
unable to work and far less food is
being produced than normal 25 million
tons of grain are currently stuck in
ukrainian ports that are being blockaded
by russian forces ukrainians have only
managed to transport a fraction of their
last harvest by rail the problem is that
ukraine has a different track gauge to
the rest of europe so freight cars can't
just pass through the grain needs to be
unloaded and reloaded at borders causing
a bottleneck
with swades of ukrainian farmland having
turned into battlefields and the
country's road and port infrastructure
under attack by russian missiles and
bombs ukraine's food supply chain is
entirely seized up there are limitations
on farm working hours because of curfews
and there are limits on the movement of
agricultural equipment because of
controls on the roads
even if peace was declared tomorrow the
fields of ukraine are filled with
unexploded ordnance which farmers would
need to clear farming equipment has been
destroyed skilled workers have been lost
to the war and the time window for
preparing fields for planting has passed
it's important to note that access to
food is of urgent concern for the
millions of ukrainians impacted directly
by this tragic invasion so i must
acknowledge that vital priority the
damage to ukraine's transportation
infrastructure has made getting food to
internally displaced people extremely
difficult the world food program
estimates that 45 of the population of
ukraine is worried about finding enough
food to eat right now we don't know how
long the conflict will last in ukraine
but between 19 million and 34 million
tons of export production could
disappear this year
next year depending on the situation in
ukraine the figure could be between 10
million and 43 million tons
that translates into the necessary
caloric intake for 60 million to 150
million people apart from the obvious
issues of people going hungry a
reduction in food supply means that
prices can be expected to rise and these
higher prices will affect an even
broader range of the world's population
well beyond 150 million people another
problem the world is facing is a
shortage of the ingredients that go into
synthetic fertilizers which in some
cases have tripled in price since the
start of the pandemic several problems
contribute to this shortage including
the russian invasion of ukraine supply
chain issues caused by storms and high
natural gas prices for the first time
ever farmers the world over all at once
are testing the limits of how little
fertilizer they can apply without
devastating farm yields come harvest
time
the nitrogen used in most synthetic
fertilizers is made by combining the
nitrogen in the air with hydrogen in
methane to produce ammonia which is then
used to create other forms of nitrogen
including ammonium nitrate and urea
natural gas is used in this process both
to provide the methane needed and as a
heat source for the reaction higher
natural gas prices mean more expensive
fertilizer
potash traded in vancouver has almost
tripled in price since the start of the
war in ukraine this is good for canada
which is the largest producer of potash
in the world but bad for farmers and bad
for food prices russia and belarus are
the number two and three producers of
potash in the world reduced grain
exports from ukraine will hit
particularly hard in africa and the
middle east where much of the country's
wheat goes
ukraine accounts for 80 percent of
lebanon's wheat imports and is a leading
supplier for countries including somalia
syria and libya egypt imports almost
two-thirds of the wheat it consumes
making it the world's largest wheat
importer more than 80 percent of the
wheat egypt imports comes from russia
and ukraine and while a lot of the
imports are for domestic consumption
egypt also processes these commodities
to export to eastern africa so the
impact of the war in ukraine will be
felt across many nations poor countries
which are already facing widespread
hunger will feel the pain the most the
world bank has warned that for each
percentage point increase in food prices
10 million additional people are thrown
into extreme poverty worldwide
countries that are food exporters are
less likely to suffer and countries like
china that have a strategic grain
reserve are better positioned than most
in fact china may well decide to use
some of their strategic grain reserves
for diplomatic purposes to generate good
will from countries that are suffering
so how concerned should we be about
global food shortages it's difficult to
say right now as we need to keep an eye
on incoming data in the coming weeks and
months but at present the situation
looks worse than it did during the last
food price crisis that happened in 2007
and 2008.
a limited disruption scenario would
still likely have an impact that lasts
until 2024 in such a scenario we miss
one planting season and see limited
sanctions at least relating to
agricultural commodities and fertilizer
the reason that this would still have an
impact out until 2024 is that farmers
would take a while to recover to normal
planting missing a harvest or being
unable to export would leave farmers low
on funds for seeds fertilizer and
agricultural equipment making future
harvests smaller in a situation where
the war drags out much longer several
planting and harvesting seasons could be
missed there could additionally be an
escalation of sanctions which at some
point could also include some
agricultural commodities or there might
be governments that stop exporting vital
commodities to countries that need them
this could result in significant
problems in global food availability the
most recent period in history where we
saw similar spikes in food prices was in
2007 and the first half of 2008.
world prices for rice rose by 217
percent wheat by 136 percent corn by 125
percent and soybeans by 107 over that
period the price rises brought about
protests and riots in parts of asia and
africa high food prices are likely to
cause government interventions which can
sometimes only add to the problem things
like food export bans can reduce a
farmer's profitability leaving him
underfunded to plant a larger crop for
the next season if you're interested in
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description below now throughout history
people have argued that the world is
running out of food and resources and
that's not the argument that i'm making
but it does appear that there might be
quite a squeeze in the near term it's
probably reasonable to expect higher
food prices if supplies remain
constricted
there are fortunately a number of ways
that these problems can be dealt with
should they last longer than expected
while u.s corn farming is highly
productive
and typical yields fall between 140 and
160 bushels of corn per acre
unfortunately the food derived from all
of that farming activity is considerably
lower the corn crop in the united states
is mostly used for biofuels and animal
feed around 40 percent of u.s corn is
used to make ethanol for use as fuel the
average iowa corn field has the
potential to deliver more than 15
million calories per acre each year
which is enough to sustain 15 people per
acre if we ate all of the corn ourselves
but with the current allocation of corn
to ethanol and animal production
we end up with an estimated three
million calories of food per acre per
year mainly as dairy and meat products
which is enough to sustain only three
people per acre per year that's lower
than the average delivery of food
calories from farms in bangladesh egypt
and vietnam the environmental
credentials of using corn derived
ethanol as a fuel are being questioned
right now dr tyler lark from the
university of wisconsin did a study that
found that ethanol is likely at least 24
more carbon intensive than gasoline due
to emissions resulting from land use
changes to grow corn along with
processing and combustion to be clear
some of the ethanol that is produced for
fuel use is derived from other
non-edible plant materials an explosion
of farming technology in the 1960s known
as the green revolution
raised agricultural output significantly
today further innovation could make a
huge contribution to more secure
unsustainable food production green
technologies biotech advances and
artificial intelligence could improve
farming efficiency reduce waste and
safeguard ocean resources
ai and modern sensors can be used to
help food processors sort better
reducing food waste and making better
use of food byproducts there are sensors
being used by farmers that reduce calf
mortality rates from birth related
complications by attaching a sensor to
the cow's tail which alerts the farmer
when the cow needs assistance data and
advanced analytics can also be used to
better monitor and manage the seas to
limit overfishing agriculture is a
traditional industry but one that's been
benefiting more and more from modern
technology food shortages are likely to
drive further innovation in this space
if you enjoyed this video you should
watch my video on how the pandemic
affected global housing prices next
don't forget to check out today's video
sponsor composer using my link in the
description below along with their
disclosure see you later bye
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