Food and Commodities Crisis is Going to Sharpen

According to the Global Crisis Response Group more and more people are now forecast to be pushed into food insecurity and extreme poverty by the end of 2022. There is an estimate that 345 million people will be acutely food insecure or at a high risk of food insecurity in 82 countries in 2022.

Meanwhile, in early July, the United Nations Development Programme estimated that up to 71 million people could have already been pushed into poverty in the three months since the start of the confict between Russia and Ukraine, with hotspots in the Balkans, Caspian Sea region and sub-Saharan Africa, particularly the Sahel. As citizens in many countries begin to grapple with the cost-of-living crisis, an intensification of social protests and riots has been recorded. According to the Armed Conflict Location and Event Data Project, the number of riots worldwide increased slightly between the first and the second quarters of 2022. 

Prices of commodities in global markets are still high but stabilizing. The food price index of the Food and Agriculture Organization of the United Nations (FAO) declined slightly in June 2022 and is down by about 3.3 per cent from its historic high in March. Crude oil prices dipped below the $100 per barrel mark at the beginning of July and have since remained near that level. Agriculture and commodity spot indexes are now close to, and some days below, pre-conflict levels. Shipping costs have also slowly begun to decrease, especially for bunker and tanker ships that are the most highly correlated with commodities and that have contributed considerably to the increase in consumer prices and import costs across the board.

The fall in prices might have been influenced by bumper crops in Australia, Canada, the Russian Federation and the United States of America, as well as by optimism following the signing on 15 July 2022 of the agreement between the Russian Federation, Türkiye and Ukraine, under the auspices of the United Nations, to reintegrate grains and sunflower oil from Ukraine into global markets and facilitate unimpeded access to food and fertilizers from the Russian Federation which had been a fundamental recommendation by GCRG.5 Recent moves may also signal less uncertainty in commodity trading and transport markets. Lastly, as at 30 June 2022, there were 27 countries with 40 measures restricting food exports; at present, there are 25 countries with around 39 measures affecting over 8 per cent of global trade. In this regard, the situation has ameliorated, yet it could be further improved.

Source: UN GCRG