People shop in a supermarket at Changi Jewel in Singapore on Dec 22, 2020. (ROSLAN RAHMAN / AFP)
Consumers in Singapore, one of the world’s most liveable cities, will soon miss the taste of fresh chicken meat following an export ban by Malaysia. This is just one of the latest outcomes of fears of a global food crisis stemming from the COVID-19 pandemic and the Russia-Ukraine conflict.
Malaysia announced on May 23 that it will halt the export of up to 3.6 million chickens a month from June 1, as part of measures to address the domestic supply shortage and stabilize prices. Globally, chicken prices have risen since the Russia-Ukraine conflict started in February.
With Asian countries taking steps to enhance their food security, experts have warned that any excessive measures to shore up domestic food supply may have long-term impacts that harm their economies and disrupt fair trade
Malaysia’s move is expected to hit Singapore hard — about a third of the city-state’s chicken supply comes from Malaysia. The Singapore Food Agency issued a statement later on May 23 saying it encourages consumers to switch to frozen chicken and buy only what they need.
However, with Asian countries taking steps to enhance their food security, experts have warned that any excessive measures to shore up domestic food supply may have long-term impacts that harm their economies and disrupt fair trade.
Some measures are counterproductive, said Marcel Schroder, economist at the Asian Development Bank, noting that there is a worrisome trend of an increase in trade restrictions around the world.
Since the beginning of the Ukraine crisis, more than 50 trade restrictions have been introduced globally, meaning that export and import controls now apply to more than 20 percent of world trade, Schroder said. He said developing Asia is no exception, since countries in the region have also announced export restrictions on many agricultural-related products.
India, the world’s second-largest wheat grower after China, banned wheat exports in mid-May after a huge crop loss due to a heatwave in March. Earlier in May, Pakistan imposed a ban on the export of sugar. Indonesia banned the export of crude palm oil on April 28, but then lifted the ban on May 23 after the country brought domestic cooking oil prices and supply under control.
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“These measures have worsened price pressures in agricultural commodities markets, which in turn may trigger a vicious cycle of more trade restrictions over food supply concerns by other countries and further price increases,” Schroder said.
These measures (export ban) have worsened price pressures in agricultural commodities markets, which in turn may trigger a vicious cycle of more trade restrictions over food supply concerns by other countries and further price increases.
Marcel Schroder, economist at the Asian Development Bank
“This goes against the lessons learned in the past which showed that reducing trade barriers and promoting free international trade can help mitigate the negative impacts of food crises,” he said.
While such measures can be effective in the short term, Tung Duc Phung, director of the Mekong Development Research Institute in Hanoi, said they can harm the supply side in the long term. They distort the market and might be violating trade agreements, even leading to the possibility of trade wars. And this would slow economic growth.
“The most important measures these countries need (are) to promote the expanding of agriculture by supporting policies to attract more investment,” Phung told China Daily.
During a two-day meeting held in Bangkok on May 21-22, trade officials and representatives from the Asia-Pacific Economic Cooperation economies expressed similar concerns over the still-fragile recovery from COVID-19 in the region, including global supply chain disruptions, inflation, food and energy crises.
“We are concerned about the increase in food insecurity and hunger globally,” said a chair’s statement issued after the APEC Ministers Responsible for Trade meeting. It also reiterated the shared commitment in the initiative, APEC Food Security Roadmap Towards 2030, to help each other achieve food security, recognizing that a well-functioning food system is critical to people’s health and well-being and to the success of the region’s economies.
“We believe that there are many factors that affect food security, however, a free, open, fair, non-discriminatory, transparent and predictable trade and investment environment can help support increased food security,” said the statement, which also called for support from the World Trade Organization.
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Besides the impact of the pandemic and other global challenges, the region’s concern over food security stems from the fact that both Russia and Ukraine are major players in the global trade of food and agricultural products. According to the World Food Programme, the two countries supply 30 percent of wheat and 20 percent of maize to global markets, putting them in the top five exporters globally for both commodities.
Russia and Ukraine are also key exporters of sunflower oil and barley, contributing more than three-fourths and one-third of supplies to international markets, respectively. In addition, Russia is the world’s biggest exporter of fertilizers.
Besides the impact of the pandemic and other global challenges, the region’s concern over food security stems from the fact that both Russia and Ukraine are major players in the global trade of food and agricultural products. According to the WFP, the two countries supply 30 percent of wheat and 20 percent of maize to global markets, putting them in the top five exporters globally for both commodities
Yet the ongoing conflict and the sanctions led by the United States have brought production and exports from Russia and Ukraine largely to a halt.
The Kremlin said on May 23 that Russia is not the source of the problem; it is those who imposed sanctions against it and the sanctions themselves that should be blamed for the global food crisis.
United Nations Secretary-General Antonio Guterres said on May 18 that the conflict threatens to tip tens of millions of people over the edge into food insecurity, followed by malnutrition, mass hunger and famine, in a crisis that could last for years.
“In the past year, global food prices have risen by nearly one-third, fertilizer by more than half, and oil prices by almost two-thirds,” said Guterres, noting most developing countries lack the fiscal space to cushion the blow of these huge increases.
If high fertilizer prices continue, the current crisis in grain and cooking oil could affect many other foods including rice, affecting billions of people in Asia and the Americas, said Guterres.
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A forecast by the World Bank in April said global food prices are expected to rise 22.9 percent this year, the most since 2008, as the Russia-Ukraine conflict has exacerbated existing stress in the commodity markets following the recovery from the COVID-19 pandemic.
Any disruption to the supply of key commodities like wheat, maize and fertilizers due to the conflict can affect food security in the rest of the world, including developing Asia, said Schroder from the ADB, adding that the food supply is also affected by natural gas and crude oil markets, because Russia is a major exporter of these commodities.
“The danger is that a prolonged fertilizer crisis in the form of high costs or outright unavailability has a big negative impact on crop yields which could threaten food security in developing Asia and beyond,” said Schroder.
This is particularly true as many countries in Asia rely on agriculture and need chemical fertilizers, according to Sayamol Charoenratana, head of the Human Security and Equity Research Unit and a researcher of the Chulalongkorn University Social Science Research Institute in Bangkok.
In Thailand, around 10 million of the total 70 million population are in the agricultural industry, and using chemical fertilizers is a common practice, she said, noting Thailand imports about 5 million tons of fertilizer per year from countries including China, Canada and Russia.
“At this moment, the price of fertilizers has risen around 30 percent … so (this has) an impact on the cost for the farmers,” Sayamol told China Daily.
On the consumer side, the price of instant noodles, which used to be about 5 baht ($0.15) per bag, has increased for the first time in 14 years this year by 1 baht, said Sayamol, adding the increase, though it may seem small, can make it difficult for people, especially the poor, to fill their stomachs.
Cambodia, a net importer of oil and gas, also suffers from the Russia-Ukraine conflict as the rising prices cause higher input prices including farmgate and processing costs, said Sok Piseth, research associate of the Cambodia Development Resource Institute.
Transport cost of delivering agricultural products from farms to border checkpoints and sea ports for export purposes is also likely to be affected, Sok told China Daily, expecting prices of agricultural products from Cambodia to increase.
“This phenomenon reduces the competitive advantage of Cambodia’s agricultural products compared with the neighboring countries,” said Sok.
“Since early April, many Asian countries are starting to feel supply chain disruptions. And the prices of simple items like shallots have spiked,” said Paul Teng, adjunct senior fellow at the Centre for Non-Traditional Security Studies at the S. Rajaratnam School of International Studies, at Singapore’s Nanyang Technological University.
While regional governments look to increase food production, Sayamol Charoenratana, head of the Human Security and Equity Research Unit, said it is important to support the food producers by providing them with more food sovereignty because farmers usually gain a small amount of profits while the middlemen that sell the products overseas take a larger chunk
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Teng said poor consumers are being affected by price increases in many food items and reducing their purchases.
“In Southeast Asia, there is an opportunity in the crisis in cooking oil,” said Khor Yu Leng, research head for Southeast Asia at Singapore-based consultancy Segi Enam Advisors.
Khor told China Daily that palm oil exports can fill the gap when other vegetable oils like rapeseed oil and sunflower oil, of which both Russia and Ukraine are key exporters, are in tight supply.
“My check of vessel movements from Indonesia shows a big rise in palm oil tankers going to the Commonwealth of Independent States (and) Russian region,” said Khor.
While Thailand, also a palm oil producer, pulled back on domestic use of the product in biodiesel to ensure food supplies, Malaysia and Indonesia are sticking to diverting it into domestic transport fuel with 20-30 percent biofuel blending mandates, said Khor.
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Sayamol, from Chulalongkorn University, said Thailand can contribute to the global food supply given that the major food exporter always brands itself as the kitchen of the world.
The Thai Food Processors Association, quoted by the Bangkok Post on May 9, said Thailand’s food exports are expected to grow 5 percent this year to 1.1 trillion baht, driven by the conflict and mounting concerns over food shortages in many countries.
While regional governments look to increase food production, Sayamol said it is important to support the food producers by providing them with more food sovereignty because farmers usually gain a small amount of profits while the middlemen that sell the products overseas take a larger chunk.
She also said developing countries in Asia should increase the adoption of organic farming to reduce their dependence on chemical fertilizers.
On the other side of the coin, the ADB’s Schroder said Thailand’s fossil import cost has risen to 6.4 percent of GDP — one of the highest in developing Asia — as the oil price reaches around $100 per barrel.
Similarly, Vietnam is a food exporter but more than 40 percent of its total wheat imports come from Russia and Ukraine, said Schroder, noting the number of countries in developing Asia that can experience net benefit from the Russia-Ukraine conflict is likely to be limited to oil and gas exporters like Azerbaijan, Brunei and Malaysia. But they could also face downside risks as their exports may be jeopardized by the conflict.
Sok, from the Cambodia Development Resource Institute, said regional countries should have joint dialogues to find solutions for the crisis, jointly supporting regional food security and stability by lowering mutual tariffs and nontariff barriers to sustain agricultural exports.
As natural resources like water are key to rice production in the Mekong region, Phung from the Mekong Development Research Institute said it is important for countries to cooperate in water management, especially the arrangement between agriculture production and hydropower production.
“They should also develop a mechanism like OPEC in order to obtain the maximum benefit from agriculture export and then to ensure the food security for the region and Asia,” said Phung, referring to the Organization of the Petroleum Exporting Countries that was formed to coordinate and unify petroleum policies among member countries.
They (countries) should also develop a mechanism like OPEC in order to obtain the maximum benefit from agriculture export and then to ensure the food security for the region and Asia.
Tung Duc Phung, director of the Mekong Development Research Institute in Hanoi
Beyond Asia, Bart Edes, distinguished fellow at the Asia Pacific Foundation of Canada, said East Africa is among the hardest-hit regions in the world due to the combined crises including the Russia-Ukraine conflict.
In Ethiopia, Kenya and Somalia, the number of people experiencing extreme hunger has soared from over 10 million to more than 23 million since last year, according to a report released by non-governmental organizations Oxfam and Save the Children on May 17.
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The Russia-Ukraine conflict “is compounding existing problems in the world’s system for feeding people”, Edes told China Daily.
Earlier in May, Food and Agriculture Organization Director-General Qu Dongyu called on governments to “refrain from imposing export restrictions, which can exacerbate food price increases and undermine trust in global markets”.
At 160 points, the FAO Food Price Index reached its highest level ever in March, and averaged 158.2 points in April.