BusinessToday Previous Editions

10 OPINION 2.6.2022 MANY countries are facing growing levels of food insecurity, reversing years of development gains, and threatening the achievement of Sustainable De- velopment Goals by 2030. Even before COVID-19 reduced incomes and dis- rupted supply chains, chronic and acute hunger was on the rise due to various factors. Here it is opportune to explain the mechanism to measure the global food price index. is is based on the prices of commodities such as meat, dairy, cereals and other goods - un- fortunately, as can be explained in this article, prices are at their highest in a decade. Food insecurity can be defined as a situation either for a long or short pe- riod where food intake or eating pat- terns is disrupted due to lack of money and other factors. Many people around the world are not able to meet their re- quired needs exacerbating problems that increase their food insecurity risk. One can mention the fear in Malta of high prices hitting the supply of LPG once the massive subsidy paid by the government is exhausted. So far, there is no scope for panic, and this was the advice given by a senior official at Liqui- gas Malta. He assured everyone that the company had secured enough supplies of LPG "for a good number of months". Again, a lot depends on the subsidy is- sued by the government as world prices have skyrocketed. Another worry is the temporary rationing of certain food- stuffs. Bargain supermarket Lidl has put a limit on the number of basic items customers can purchase, as importers warn the war in Ukraine is impacting supply chains. For example, clients can only buy five items of canned fruits and vegetables, while toilet paper, kitchen towels and napkins are limited to three pieces per item and per receipt. As the scarcity of sunflower oil pro- duced in Ukraine is becoming felt, cur- rently, supermarkets allow customers to buy only three one-litre bottles. It goes without saying that the war in Ukraine has upset the price of wheat, cereals and animal feed. e price of wheat has ris- en by almost 30% since the war broke out and 60% since last January. Wheat rose to $373 per tonne on the futures market, 30% higher than the $287 it closed at on 23 February, the day be- fore the Russian invasion. LPG prices also skyrocketed in the wake of the Rus- sian invasion. e good news was an- nounced by the finance minister Clyde Caruana, saying the government is ex- pected to budget a further €200 million over and above the first tranche of €200 million earmarked for the post-COVID response to inflation and supply chain disruptions. Why is the procurement of such important feedstocks so difficult? Part of the answer lies with sanctions imposed by the EU on Russian banks. A number of banks were banned from the use of the SWIFT payment system. For instance, banks had their foreign reserves frozen by the EU. e list in- cludes the foreign reserves of the Rus- sian Central Bank. Again, no SWIFT payment facility was permitted at Bank Otkritie, Novikombank, Promsvyaz- bank, Rossiya Bank, Sovcombank, VEB, and VTB Bank. To complicate matters, deliveries of essential grains have halted once the Black Sea is currently closed off because of the actions of Russian war- ships. In an unprecedented move, trade shipping routes have been disrupted, and no wheat is making it out of Russia or Ukraine through that channel. When a country like Ukraine, which provides food for 400 million people, is out of the market, it creates volatility. e United Nations is stressing the need to get ports running again - with 36 countries importing more than 50 per cent of their grain from that region. Failure to open the ports in the Odessa region is a declaration of war on global food security and will, unless resolved quickly, result in famines, destabilisa- tion and mass migration around the world. Why is the war in Ukraine so dis- ruptive? e answer is because records show that both Russia and Ukraine sup- ply 28% of globally traded wheat, 29% of the barley, 15% of the maise and 75% of the sunflower oil. Russia and Ukraine contribute about half the cereals im- ported by Lebanon and Tunisia; for Lib- ya and Egypt, the figure is two-thirds. e war is disrupting these supplies be- cause Ukraine has mined its waters to deter any assault, while to complicate matters, Russia is blockading the port of Odesa. Away from the turmoil in eastern Ukraine, we cannot omit to mention how Brazil, itself a pivotal meat produc- er needs to import essential fertiliser to grow crops for cows to graze, and nearly half of that came from Russia and Be- larus last year. In March, the Brazilian farm minister said that the country only has enough fertiliser to last until Oc- tober, raising the possibility of a crisis when the planting season begins in Sep- tember. Even before the Russian invasion, the World Food Programme had warned that 2022 would be a terrible year. China, the largest wheat producer, has said that, after rains delayed planting last year, this crop may be at its worst ever. No comfort was forthcoming from António Guterres, the UN Secre- tary-General. He warned on 18 May that the coming months threaten "the spectre of a global food shortage" that could last for years. e high cost of staple foods has already pushed upwards the number of people who cannot be sure of getting enough to eat. As can be expected, households in emerging economies spend 25% of their budgets on food - and in sub-Sa- haran Africa, as much as 40%. In Egypt, bread provides 30% of all calories. It is no consolation that 25 million tonnes of corn and wheat, equivalent to the an- nual consumption of all of the world's least developed economies, are trapped in Ukraine. To solve the shortage and food insecurity while missiles wreak havoc in eastern Ukraine, can negotia- tors persuade President Putin to allow unhindered Ukrainian exports. Again, ideally, Ukraine has to de- mine the approach to Odesa; and Tur- key needs to let naval escorts through the Bosporus. e global food security challenge is straightforward, as can be witnessed by warnings issued by friends of the Earth Malta campaigns for Food Security in Malta. One way of achiev- ing stability of supply is to protect and regulate domestic agricultural produc- tion and trade, pushing for more equi- table rights for fisheries and farm-based communities and educating property developers to stop pouring concrete over arable land. As a Mediterranean country with a passion for food, Mal- tese consumers have a right to know where their daily food comes from and how sustainable is the supply. Food insecurity is a worst fate than the pandemic George Mangion George Mangion is a senior partner at PKF, an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services. His efforts have made PKF instrumental in establishing many companies in Malta and established PKF as a leading professional financial service provider on the Island

• Cover