The Banking Executive Magazine - December Issue 2022

Avoiding a Global Food Crisis ISSUE 168 DECEMBER 2022 the BANKING EXECUTIVE 17 It is becoming clear that the Ukraine war’s economic and humanitarian repercussions – especially rising food prices – will be felt far beyond Eu- rope. The international community must act now to prevent some of the world’s poorest and most vulnerable people from becoming collateral damage. The war in Ukraine is causing im- mense, heart-wrenching human suf- fering. At the World Trade Organization, an institution based on the rule of law and established to help forge peace, we find the vio- lence abhorrent to our fundamental principles. United Nations Secretary- General António Guterres’s call for the bloodshed to stop, and we wish for a prompt and peaceful resolution of the conflict. But even as we remain transfixed by the shocking and tragic images of Ukrainian cities under attack, and even as we commit to doing all we can individually and collectively to help Ukraine’s people, it is also be- coming clear that the war’s eco- nomic and humanitarian repercussions will be felt far beyond Europe. We have a responsibility to mitigate these consequences proac- tively as well. Even prior to the war, rising food and energy prices were straining house- hold and government budgets in many smaller and poorer countries whose economies had also been among the slowest to recover from the COVID-19 pandemic. New price spikes triggered by the conflict in Eastern Europe now threaten to cause poverty and food insecurity to rise. In these circumstances, the role of the WTO and trade in general, particularly for countries that are net food importers, is of paramount im- portance in preventing hunger. While Ukraine and Russia together account for a modest 2.2% of global goods trade, according to WTO esti- mates, this figure understates their significance in grain and energy mar- kets, and as suppliers of fertilizer, minerals, and other inputs critical for a wide range of downstream produc- tion activities. In 2020, for example, the two countries supplied 24% of globally traded wheat, and 73% of sunflower oil. Imports of such commodities are es- sential for basic food security in the many countries that lack the water, soil, and weather conditions to grow all the food they need. Over the past 30 years, Ukraine and Russia have become key sources of grain for countries including Mongolia, Sri Lanka, Lebanon, Egypt, Malawi, Namibia, and Tanzania. The World Food Programme, the UN agency that provides food aid to people af- fected by conflict and disasters in more than 80 countries, typically procures more than half of its wheat from Ukraine. War-induced blockages of Ukrainian ports and the international sanctions imposed on Russia have sharply re- duced the available global volume of wheat. Fears that Ukrainian farmers will be prevented from growing this year’s spring crop have compounded supply concerns, causing the price of wheat futures to rise 40% and reach record highs in the first week of March. Surging energy and food prices have begun to elicit familiar policy re- sponses, with several governments