It is traditional that, during its spring meetings, the International Monetary Fund (IMF) presents the update of its economic forecasts. On this occasion, the institution did not miss its appointment to reduce its international growth forecast and the persistence of high inflation well into 2023. In developed countries, concern is centered on the high prices of gas, oil and electricity. electricity, which will be transferred through the entire supply chain to also increase the so-called core inflation, which excludes from its calculation the most volatile elements such as energy and food, but which is also affected by these components.
Less attention has been drawn by the IMF’s appeals to a situation that, although it does not affect us so acutely, can have profound economic and social consequences for the entire planet, and it is none other than the notable increase in the price of food. According to the FAO, the United Nations food organization, the planet is currently facing, in real terms, the highest food prices since records began, well above the food crisis of 2007-2010, and higher even to those estimated for the economic crisis of 1973. Food prices have grown by 60% since 2020, with a notable rise in vegetable oils (240% since 2020), cereals (70%) and milk and dairy products (45%). In the futures market, this upward trend in prices is confirmed, with increases, for wheat available in July 2023, of more than 16% in April 2022 alone. In other words, it is expected that the trend of price growth lasts over time. This situation is caused not only by the interruption of the supply of cereals from Ukraine, but also by the impact that the price of oil has on world agricultural production, on which it is highly dependent.
The impact of this growth threatens to significantly reduce food security in developing and emerging countries. According to United Nations estimates, up to 1.7 billion people would be affected by the different transmission channels of the crisis generated by the Russian invasion, of which 1.2 billion people, living in 69 countries, would be affected acute. The challenge is even greater if we also take into account that food security crises are accompanied by political instability and the risk of new internal or international conflicts.
In the previous food crisis in 2007-2010, the international community mobilized millions of euros through bilateral cooperation mechanisms, the World Bank and United Nations agencies. Spain was one of the most active countries, participating in the G8 summit in L’Aquila in 2009, co-founding the Global Food Security Program with the United States, and disbursing more than 1,500 million euros for food security, both in bilateral agreements and through multilateral organizations. Our international commitment culminated in the recent appointment of the Spaniard Gabriel Ferrero as president of the United Nations Global Committee on Food Security.
However, on this occasion, the commitments are lagging behind: the European Commission has approved aid for more than 500 million euros for neighboring countries and the Sahel, but global needs greatly exceed these figures. The appeal of the World Food Program estimated its needs at 18,000 million dollars to attend to the 137 million people most seriously affected and the FAO has only reached 10% of the response funds that they had estimated.
Responding inadequately is a serious geopolitical risk: in the path of a crisis that impoverishes a large part of the world’s population, the appeal to democratic principles, and not to material interests, will be a bad claim to ensure the complicity of emerging countries and developing. If the European Union wants to maintain a certain international leadership in the face of an increasingly consolidated illiberal bloc, it will have to intensify support for the most vulnerable populations that are suffering the consequences of this crisis.
He knows in depth all the sides of the coin.
Jose Moises Martin Carter is an economist and consultant
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