A sigh of relief as the UN-brokered humanitarian deal reopened Odesa’s port to allow Ukrainian grain through may have been premature. Sierra Leone-flagged Razoni appears to have arrived in Syria, one of Russia’s strongest allies. It was set to reach the Horn of Africa as part of the World Food Programme’s response (WFP) to the drought in the region.
Unsurprisingly, Africa is on course to be the hardest hit by global food shortages. According to the African Development Bank, Africa is already lacking 2 million metric tons of fertilizer. The International Committee of the Red Cross points out that the countries most affected by food insecurity are those most reliant on wheat from Russia and Ukraine, including Somalia (over 90% dependent), Democratic Republic of Congo (over 80% dependent) and Burkina Faso, Cameroon, Ethiopia, Nigeria, and Sudan (all between approximately 20-45% dependent). Many of these emerging economies are facing the additional burden of a decline in their currencies on top of rising food prices. Egypt has turned to the IMF for aid, inflation in Turkey is almost 80%, and the World Bank has described the crisis in Lebanon as one of the most severe of the past 100 years. According to the World Bank, for every 1 percentage point increase in food prices, an additional 10 million people are expected to fall into extreme poverty.
In June the G7 group, led by the United States, pledged $4.5 billion towards ending food insecurity. With 828 million people reportedly now going to bed hungry every night, this is nowhere near enough. The WFP estimates the food crisis needs resources of at least $22 billion. Ahead of Biden’s planned conference on hunger, nutrition, and health in September, we need more than a lacklustre response.
This crisis started long before Russia invaded Ukraine. The pandemic, regional conflicts, commodities shortages, sovereign debt, and climate change have all contributed to food shortages. But the war has made it much worse, exposing how central Ukraine’s grain production and the Black Sea shipping route are to our global food supply. As troubling is the shortage of fertilizer where prices of fertilizer have risen around 300% since February, with Russia producing 10-13% of the global supply.
Leaders are walking a fine line. French President Emmanuel Macron described the global food crisis as one of Russia’s “weapons of war” during a visit to Cameroon in July, dismissing suggestions Western sanctions were to blame. Food protectionism is likely on the cards. Vaccine hoarding over the pandemic was just one of the many manifestations where rich governments looked after their own people first. We should not expect to rely on donor support and humanitarian aid. National food subsidies have a limited shelf life. We need the private sector to step-up, long-term investment, innovation and to foster regional partnerships and cooperation.
So what can be done? Trade routes need to be diversified, innovation needs investment, and we need to get products moving around the world. Regional partnerships to ensure security should be encouraged. This month the UAE announced a $1 billion investment into Pakistan. This will enable investment opportunities in energy, agritech, and logistics. The UAE is regarded as food secure because of its importing power, but it is telling that the country is focusing investment on food security projects as well as diversifying food import sources.
Investing in long-term solutions to develop better and greater food production, distribution and consumption systems for national purposes is key to ensure food security across the world. Stakeholders with the power to effect change include governments, parastatal organizations and private or public companies. These investments should be made in partnerships with national, regional, and state actors and agencies to build a sustainable and lucrative future for the agriculture industry and its various stakeholders. They will also bring significant commercial returns to investors.
Ma’aden, the PIF-owned and Saudi-listed miner, is one such example. It is increasing its commercial production as demand for its products continues to grow. Last week it reported a 15 percent jump in the volume of its phosphate fertiliser sales and a record net profit overall of $1.07 bn, an increase of 232 percent compared to the previous year.
While large companies have greater investment capacities, smaller players can also have a significant long-term impact on the agriculture industry. Swiss-based trader Paramount Energy & Commodities invested in Carrinho Group, a food distributor in Angola, as part of its Empowering Africa initiative. Paramount’s investment was such a success that the company is seeking to expand its Empowering Africa initiative to help other small agricultural businesses prosper across the continent.
Food insecurity has been a persistent problem across Africa. It is now spreading to other regions as well. Addressing this crisis requires comprehensive and sustainable investments. Private actors must be part of the solution in addition to governments, multilateral institutions, and public companies. The global food security crisis is after all what IMF Managing Director, Kristalina Georgieva, describes as “the world’s greatest solvable problem”.