Source of this article: Times Finance Author: Chen Jiahui
Food security issues have attracted much attention.
Recently, David Malpass, president of the World Bank , warned that the Ukrainian crisis caused a soaring food price and the world is facing a "human disaster." He said the current food security crisis will last for months and may even continue until next year.
htmlOn April 8, data released by United Nations Food and Agriculture Organization (hereinafter referred to as "FAO ") showed that as the conflict in the Black Sea region had an impact on the market of staple food and vegetable oil, the world's food commodity prices jumped sharply in March, reaching a historical high.Specifically, the FAO Cereal Price Index averaged 170.1 points in March, up 17.1% month-on-month, setting a record high since 1990.
"Since the Russian-Ukrainian conflict, global bulk agricultural products prices have risen, which is basically the highest in more than 50 years." On April 24, Hu Bingchuan, director of the Agricultural Products Trade and Policy Research Office of the Institute of Rural Development, Chinese Academy of Social Sciences, told Times Finance.
In Hu Bingchuan's view, this world is not short of food, but after a conflict occurs, people will add some measures to ensure supply, which further aggravates the current food crisis.
At the same time, global oil prices have soared recently, and demand for biofuels as alternatives has increased significantly. According to CCTV Finance, biofuel oil mainly includes bioethanol and biodiesel, and is currently mainly produced using grain as raw materials. The United States' ethanol production in 2021 is about 45 million tons. According to the calculation that 1 ton of biofuel ethanol requires about 3 tons of grain raw materials, the United States consumes a total of about 135 million tons of grain, which is about 2.5 times Australia's total annual grain output.
According to incomplete statistics, in 2021, the United States, Brazil, and EU are consumed by about 300 million tons of food in 2021.
Will the soaring grain prices affect domestic food security? Hu Bingchuan admitted frankly, "We do not have a food crisis." He believes that all mankind is suffering from the costs of high food prices, and the biggest impact on China is to increase import costs. "We have long attached importance to food security and ensured the goal of 'basic self-sufficiency in grains and absolute safety in food', so our rice and wheat production is actually relatively oversupply."
Image source: Visual China
The Russian-Ukrainian conflict affects people's judgment of future expectations
The record rise in food prices may put hundreds of millions of people into poverty, and the main reason for the rise in food prices is the Russian-Ukrainian conflict.
Data from the Food and Agriculture Organization of the United Nations show that Russia is the world's largest wheat exporter, and Ukraine is the fifth largest wheat exporter. They provide 19% of the world's barley, 14% of wheat and 4% of corn, accounting for more than one-third of global cereal exports.
The Director-General of the Food and Agriculture Organization of the United Nations Qu Dongyu previously said: "Given that the agricultural activities of these two exporting countries of staple food commodity products may be forced to be interrupted, the global food insecurity may be seriously aggravated when international food and agricultural input prices are already at high levels and volatile."
"Since the conflict between Russia and Ukraine, the global price of bulk agricultural products has risen, which is basically the highest in more than 50 years." Hu Bingchuan analyzed that the conflict between Russia and Ukraine has added many uncertainties. First, the grain output of both sides will be affected; secondly, the traditional trade order has been impacted, "that is, the logistics of transportation around the Black Sea was interrupted, so not only grain, but also grain-related agricultural inputs will be affected."
FAO analyzed that the upward trend in March was due to the surge in world wheat and coarse grain prices, mainly due to the conflict that caused the disruption of Ukraine and Russia's exports. Expected losses in Black Sea exports have exacerbated an already tense global wheat supply situation.
"The Russian-Ukrainian conflict will also affect people's judgment of future expectations." Hu Bingchuan explained that the world was not short of food, but after the conflict, everyone felt that food was insecure. In order to ensure their safety, people will add some measures to ensure supply, which will further aggravate the current food crisis. "It was not short of it, but once everyone grabbed it, it was short of it."
Hu Bingchuan added that after the sharp rise in grain prices, some international capital will speculate on the topic of food security in order to make profits. "As long as everyone believes that grain prices will rise, then there is room for arbitrage for these capitals." Will the grain prices, which have reached a high level, continue to soar? Hu Bingchuan believes that this is related to whether the Russian-Ukrainian conflict will develop in a more severe direction.
He analyzed Times Finance that in the first week of the Russian-Ukrainian conflict, the global prices of grains and bulk agricultural products rose to a very high level. After the stalemate in Russia and Ukraine, although their prices remained at a high level, their growth was relatively flat and they did not rise further.
"At least from the information outside Russia and Ukraine, we can see that the United States, the European Union, including China, India and Brazil, these major developed economies, and developing economies, have expectations for the future to be neutral and develop in a stable pattern," said Hu Bingchuan.
The number of hungry people around the world has further increased
Hu Bingchuan said that all mankind is responsible for the impact of rising food prices.
March 14, United Nations World Food Program said that the interruption in spring sowing in Ukraine will exacerbate the global food supply shortage; at the same time, 40% of the world's fertilizer products come from Russia, and if the supply of such products is interrupted, it will also lead to a reduction in food harvest by about 50%.
In order to protect their respective grain bags, the total number of countries around the world that have implemented grain export restrictions has reached 35 in recent weeks, an increase of 25%. By the end of March, countries had implemented 53 new interventions related to food trade, 31 of which were restricted food exports and nine involved wheat export restrictions.
"This is a means taken by these countries because they feel unsafe about the future. This means will further deepen panic and exacerbate the global food security crisis." Hu Bingchuan said that in fact, the measures taken by these 35 countries have limited impact on the global agricultural product market, because the global agricultural product-dominated exporters are in North and South America. "When will the United States and Brazil not export agricultural products, that is the most dangerous time."
has the greatest impact on the rise in food prices. "The biggest impact is the warring sides between Russia and Ukraine," Hu Bingchuan said, followed by the poor people in marginal countries. In fact, since the spread of the new crown pneumonia epidemic in 2020, the number of hungry people around the world has increased by about 100 million. After the conflict between Russia and Ukraine further pushed up food prices, the total number of hungry people around the world will further increase.
"The world is facing a 'human disaster'", Malpass called on governments around the world to increase the supply of food, energy and fertilizers as much as possible, rather than lowering production or raising prices, while providing targeted assistance to the poorest people in the world.
Hu Bingchuan admitted: "We do not have a food crisis." He said that the biggest impact of rising grain prices on China is to increase import costs. According to data released by Ministry of Agriculture and Rural Affairs, in 2021, my country's grain imports were 65.376 million tons, and increased by 82.7% year-on-year, with the import volume of US$20.07 billion, an increase of 1.1 times.
At present, China's food consumption is basically saturated. "The consumption of ordinary people is upgrading, that is, there are a lot of consumption in meat, aquatic products, fruits, vegetables, etc., while the consumption in grain, that is, rice and flour is saturated," said Hu Bingchuan. On the other hand, from a policy perspective, "we have attached great importance to food security for a long time and ensured the goal of 'basic self-sufficiency in grains and absolute safety in food', so our rice and wheat production is actually relatively oversupply."
htmlOn April 19, Meng Wei, deputy director and spokesperson of the Political Research Office of the National Development and Reform Commission, revealed, "Since 2004, my country's grain production has achieved "eighteen consecutive bumper harvests". In 2021, the national grain production hit a new high, maintaining more than 1.3 trillion jin for seven consecutive years. China's grain inventory is relatively sufficient. In the main urban areas of 36 large and medium-sized cities and areas with volatility in the market, the reserves of finished grain and oil have reached more than 15 days, and the ability to prevent market risks has been enhanced."
