FX.co ★ Grain crisis looms over poor countries

According to analysts, a global food crisis might be driven to famine levels worldwide due to a drop in exports of Ukraine's grain and volatile prices for this commodity. Despite a 10% decline in wheat prices, the poorest countries are unlikely to avoid food shortages.

Earlier, Russian President Vladimir Putin stressed that there were no problems with grain exports from Ukrainian ports. "As for the export of Ukrainian grain, we do not interfere with this. We didn't mine the approaches to the ports. Ukraine mined it," the president stressed. However, it is quite difficult and dangerous to de-mine the territorial waters. Therefore, the Ukrainian authorities are in no hurry to do so. Poor countries such as Yemen, Libya, and Pakistan cannot afford purchases of large volumes of grain. Hence, the food crisis is looming on the horizon.

Global grain prices decreased by 10%, the Italian agricultural association, Coldiretti, reported. Yet, it will hardly change the situation, especially for poor countries. According to UN estimates, 323 million people are marching towards starvation because of the crisis in Ukraine.

The threat of global famine is primarily associated with an increase in wheat prices. Earlier, they surged to a new record high of €435 per ton in Europe. This is too expensive for countries like Lebanon, Tunisia, Yemen, Libya, and Pakistan

Notably, analysts believe that a decrease in grain prices is a temporary factor. If the UN or the WTO warn about the real threat of famine, wheat prices will soar again. Over the past two years, wheat prices worldwide have ballooned by 50%.

Problems with the supply of Ukrainian grain have only worsened the situation. Russia and Ukraine account for 60% of global wheat supplies. Russia is ready to increase exports from 37 million tons to 55 million tons of grain, Vladimir Putin pointed out. However, this is unlikely to solve the problem of global hunger.

Given the increased food insecurity in the poorest countries, analysts fear that governments of these countries may soon face social unrest. If this scenario comes true, there is a likelihood of another Arab Spring. Back then, countries like Tunisia, Egypt, and Libya were swept by protests that ultimately resulted in regime changes. The main reason was food shortages. Europe should also brace for the worst and consider some measures to tackle the issue. Food shortages have already been recorded in many EU countries.