The Nexus Of Trade And Food Security Amid Global Conflicts – International Trade & Investment

The intricate interplay between trade and food security has
emerged as a vital global issue, one that is closely interwoven
with the tapestry of international conflicts and political
instability. Remember the 2019 pandemic when toilet paper supply
chains were interrupted? Now imagine that on a much larger scale
with basic food staples like rice, wheat or corn.

Food prices, covering both groceries and dining out, went up by
2.2% from February 2023 to February 2024, as per the
CPI report out on March 12 by the Bureau of Labor
Statistics.

In today’s interconnected world, where countries rely
heavily on international trade for their food supply, any
disruption in the global market can have far-reaching consequences.
This is especially true for developing countries that are already
facing challenges such as poverty, climate change and conflict.
But, what food chains are currently being interrupted?

Ukraine and the Global Bread Basket

One obvious example of how trade and food security are
intertwined with global conflicts is the situation in Ukraine. As
one of the world’s top grain exporters, Ukraine plays a crucial
role in maintaining the world’s food supply. However,
Russia’s invasion of the sovereign nation has reduced grain
exports, leading to higher food prices. According to a report by
the
Ministry of Agrarian Policy and Food of Ukraine, Ukraine
exports dropped by 90% in March, April, and May of 2022. The UN
helped enact a grain deal where grain shipments were protected as
they passed through the Black Sea. Historically, the country has
accounted for 9% of the global wheat market and 12% of the corn
market, according to the USDA’s Foreign Agricultural
Service.

This has had a ripple effect across the globe, as countries that
rely on Ukrainian grain for their food supply have been forced to
look elsewhere or pay higher prices. This not only affects the
economy and political stability of these countries, but it also
directly impacts the food security and well-being of their
citizens.

Grain Strains in Africa

Africa serves as a poignant case study for the impact of
Ukraine’s conflict on trade and food security. Many African
countries rely heavily on imported grain, and with the disruption
of Ukrainian exports, they have been forced to turn to other
sources. However, these alternative options often come at a higher
cost, making it difficult for already struggling countries to feed
their populations. This has also led to an increase in food aid
requests and further exacerbates issues of poverty and hunger in
the region.

Houthi Attacks in the Red Sea

The geopolitical tensions in the Red Sea region have escalated
considerably, further complicating the global grain trade. Houthi
attacks on shipping routes have raised serious concerns over the
safety and security of goods. These attacks not only pose a direct
threat to the crew and vessels but also contribute to the
uncertainty in the global food supply chain, leading to increased
insurance and shipping costs. This scenario exacerbates the already
high food prices, placing additional financial burdens on countries
struggling with food insecurity. In an
interview for the Associated Press, CEO of a supply chain
management company Flexport Ryan Petersen said that this conflict
could surge prices by 2%. This may seem like a small percentage,
but it can have a significant impact on the affordability of food
for millions of people.

Panama Canal and Water Levels

Many shipping routes are diverting their paths from the Red Sea,
but not all routes are available. The Panama Canal is facing one of
its driest seasons in 140 years. The Panama Canal Authority (ACP)
has
reduced daily traffic from 36 to 24 vessels. This is due to the
drought in the region, which has caused water levels in the Gatun
Lake, a crucial part of the canal, to drop significantly. These
constraints are impacting energy product carriers, container
vessels, and ships transporting grain from the United States. Most
companies looking to divert trade from the Red Sea to the Panama
Canal could mean longer transit times, resulting in perishable
goods spoiling before reaching their destination.

Broader Implications of Trade Disruption

Besides economic turmoil, hunger and disruptions to the food
chain can be a catalyst for political unrest. Populations grappling
with the governing structures that fail to provide food security
can lead to social unrest. Civil wars can lead to displacement,
refugee crises, and humanitarian emergencies. Furthermore, reduced
trade through major shipping routes can lead to supply chain
disruptions for essential goods such as medical supplies and other
critical resources. Additionally, trade disruptions can also impact
the environment. With ships taking longer routes and consuming more
fuel to avoid certain areas, there is an increase in greenhouse gas
emissions and pollution in those areas. This has detrimental
effects on marine life and contributes to climate change.

Finding Solutions

Efforts are being made to address the challenges posed by trade
route disruptions. Countries can diversify their import sources and
develop local agricultural capacities to cushion against global
supply chain disruptions. Investment in agricultural technology and
sustainable practices can enhance food production resilience and
diminish reliance on imports. Finally, implementing systems that
can predict impending crises might allow preemptive action to
protect the most vulnerable populations.

Conclusion

In light of the complexities outlined, it’s evident that
disruptions in global trade routes have far-reaching and
multifaceted impacts, ranging from economic loss and environmental
harm to social unrest and political upheaval. Addressing these
challenges necessitates a multi-pronged approach that includes
diversifying trade and import sources, investing in local and
sustainable agriculture, and improving predictive analytics to
foresee and mitigate crises before they escalate. Collaborative
global action and innovative solutions are imperative to ensure
resilience against the ripple effects of trade disruptions,
safeguarding not just the supply chains, but also the communities
and ecosystems that depend on them.

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