Wednesday, June 22, 2022

Is war in Ukraine why the world is hungry?

 There is no food shortage. According to a May 6, 2022 report by the United Nations Food and Agriculture Organization (FAO), the world enjoys “a relatively comfortable supply level” of cereals. This is confirmed by the World Bank, which noted that global stocks of cereals are at historically high levels and that about three-quarters of Russian and Ukrainian wheat exports had already been delivered before the war started.

These numbers are consistent with data from the Ukrainian Ministry of Agriculture that reported on May 19 that the country exported 46.51 million tons of cereals in the 2021/22 season, versus 40.85 million the previous year.

In a repeat of 2007-2008 food crisis, it is speculation which is the key factor behind the current rise in food prices in international markets. As reported by the Lighthouse Reports, “speculators have flooded commodity markets in attempts to make a profit out of escalating prices.” A striking example are two top commodity-linked “exchange traded funds” (ETFs) which have received US$1.2 billion of investments – compared to just US$197 million for the whole of 2021 – a 600 percent increase.

Olivier De Schutter, UN Special Rapporteur on Extreme Poverty and Human Rights, has observed that “speculative activity by powerful institutional investors who are generally unconcerned with agricultural market fundamentals are indeed betting on hunger, and exacerbating it.”

According to the New York Times, “in April, speculators were responsible for 72 percent of the buying activity on the Paris wheat market, up from 25 percent before the pandemic.” 

Instead of food shortage, the reality is that the world produces far more food than we eat. Over 33 percent of the food produced globally is used for animal feed as well as for other non-food uses, mainly agro-fuels.

The US produces roughly 400 million tons of corn, but over 40 percent of this amount – 160 million tons – goes to ethanol production, while another 40 percent goes to animal feed, and only 10 percent is used as food whereas another 10 percent is exported. India was not expected to export more than 10 million tons of wheat in 2022-2023, which is insignificant in comparison to the US numbers.

The increasing amount of food diverted to the production of agro-fuels – again as in the 2007-2008 crisis – is another major factor fueling tension in the global cereal markets. As noted in a 2009 analysis, “although biofuels still account for only 1.5 percent of the global liquid fuels supply, they accounted for almost half the increase in the consumption of major food crops in 2006–07, mostly because of corn-based ethanol produced in the United States.”

In the US, ethanol production increased from 3.6 million barrels in 2001 to over 102 million in 2019. Despite the fact that ethanol is at least 24 percent more carbon-intensive than gasoline, under pressure from the Congress and the industry, the Biden administration has just taken steps to encourage further ethanol production while continuing to heavily subsidize it. The US government-funded ethanol industry uses the equivalent of 35 percent of the global world trade of cereals of 473 million tons

 Neverthless, even in the absence of a global food shortage, the food crisis is real. Droughts, conflicts, and now high food prices, are threatening to starve hundreds of millions of people. The massive human suffering and hunger that was affecting many countries even prior to the war in Ukraine was barely met with adequate response from rich nations. UN humanitarian appeals for acute crises are chronically underfunded. In 2021, only 45 percent of the UN appeal for Yemen and the Horn of Africa was fulfilled, only 29 percent for Syria.

The US Congress just approved an aid of US$40 billion for Ukraine, including over US$26 billion of military aid. This is US$12 billion more than the US$28 billion that the US will spend globally in 2022 on international assistance through USAID.

A Global Food Crisis: Shortage Amidst Plenty | Inter Press Service (

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