Floods, drought, supply chains disrupted by COVID-19 and the war in Ukraine are some of the reasons why the world is facing global food shortages and the threat of mass starvation this year. Even agricultural Moldova is unlikely to avoid problems.
All over the world we are witnessing a rapid growth in prices and food shortages. Economic crises and food security problems, which began during the COVID-19 pandemic, have been further deteriorated this year, for reasons ranging from natural to economic and geopolitical ones.
A basis for the problem was laid as early as 2021. The coronavirus pandemic severely damaged the food supply chain around the world and disrupted marketing channels. The situation was worsened by rising fuel and transport prices, along with heat waves and severe floods and droughts caused by climate change, which destroyed for example, key crops in the American and European regions. Increased natural gas prices also played a role as they led to higher prices of nitrogen fertilizer derivatives, which only served to exacerbate food shortages and prices. According to the U.N. Food and Agriculture Organization, food prices rose by 23.1% in 2021, the fastest increase in a decade. In February 2022, prices for meat, dairy products, cereals, oils and sugar were the highest since 1961.
After Russia launched its invasion of Ukraine, food market experts warned about the potential collapse of supplies and further price increases. And they already happened: the price increase in March reached 40% year-on-year. The benchmark futures contract for wheat on the Chicago Mercantile Exchange in March 2022 broke the record level, exceeding the 2021 value by more than twice. It is expected that reduced fertilizer supplies and higher oil prices will also increase the costs of food collection, shipment and processing.
Of greatest concern is the lack of supplies of such commodity groups as wheat, corn and oilseeds. Especially considering that Russia and Ukraine are their largest exporters, which jointly account for 29% of global wheat supplies and 75% of global sunflower oil exports.
Even the Global North countries (such as the United Kingdom and the United States), which traditionally have reliable food stocks, are directly affected by rising prices amid food insecurity. Analysts rate the current price increase as the most radical since the 2007-2008 crisis. Moreover, experts believe that it may take years to restore the volume of crop production even after the hostilities in Ukraine are over.
International organizations have already prepared a number of programs to combat food shortages. For example, the World Bank announced allocation of a total of $12 billion for agricultural development in Africa, the Middle East and Eastern Europe over the next 15 months.
“This is a real crisis, and it could be worse than the food crisis in 2007-2008, affecting so many poor households. We are already seeing very serious food shortages. Social safety nets will be expanded to support those in need. This will help farmers prepare for the next planting season. Measures will also be taken to remove export restrictions and other obstacles to food trade to avoid price increases,” said Martien van Nieuwkoop, director of the World Bank’s Agriculture and Food Global Practice.
Is there a threat to Moldova?
Price shocks and supply disruptions will particularly affect countries that had strong economic and logistical ties with Russia and Ukraine, and poor households, where food accounts for a large share of expenditures. Moldova falls into both vulnerabilities.
The authorities, meanwhile, promise that there will be no serious crisis in the country. To that end, in late February, the emergency commission lifted trade mark-ups on a number of food products, including meat products, vegetables, sugar and sunflower oil. Starting March 1, export of wheat and sugar from the country is prohibited, and Prime Minister Natalia Gavrilita instructed the Ministry of Agriculture to prepare a strategy to ensure food security during the crisis.
Vladimir Bolea, the chairman of the parliamentary commission for agriculture and food industry, also stated that there is no risk of a major food crisis. According to the deputy, the decision of the authorities to ban the export of wheat ensures domestic consumption for 300 days. “We stopped exporting wheat and wheat flour in March. We have about 250,000 tons of wheat reserves, which will cover 300 days of domestic consumption. In addition, even if some regions have a lower harvest, we will have wheat. So we do not see any risk that we will have no bread or no products necessary for life,” PAS MP Vladimir Bolea said.
This view is shared by the Ministry of Agriculture which reported that last year saw a record harvest of wheat – more than 1.5 million tons, and there are 195 thousand tons in stock at the moment. The corn harvest in 2021 was 3 million tons, and now there is about 450 thousand tons in reserve. There is enough sugar for 200 days and sunflower seed for 300 days. “Based on these figures, I inform that we have enough stocks and that there is no threat to the country’s food security,” said Viorel Herciu, head of the Ministry of Agriculture.
At the same time, the wheat export ban on has severely hit the farmers, drastically reducing the income of agricultural producers, who do not have money to cultivate their fields anymore. “Given the prices that have been fixed in our country for diesel fuel, spare parts, oils, it is clear that the price of grain will be much higher than last year. Farmers now have to invest 2-3 times more in the agricultural process. The wheat export ban is good for food security, but not so good for farmers,” PCRM-PSRM MP Radu Mudreac commented on the domestic situation. The weather does not favor our agrarians either – because of the drought, officials forecast a 30% drop in the harvest.
Another noteworthy point is that the authorities talk about food security only in terms of food availability, but the main problem for the Moldovan citizens will not be the lack of food – given the existing reserves and agricultural potential of the country, products will be available. The problem is that the prices will be extremely high and most likely not affordable for everyone, and in this regard there are doubts that the authorities will manage to find good ways to offset this increase for the population.