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By crossing the Ukrainian border on February 24, Russian armed forces have unleashed a wave of devastation stretching far beyond the bomb-ridden battlefields.
Ukraine’s agricultural industry feeds an estimated 400 million people around the world each year.
At least it did before farmers faced the need to trade their combines for carbines.
Some estimates indicate that food production in the country this year will be less than 25% of its historic levels.
Further, the food that is produced is unlikely to undertake its traditional voyage around the world.
Supply chains, particularly those for food products, have yet again been thrust into turmoil with new logjams and port blockages – just as they were beginning to recover from the pandemic.
The situation in Ukraine is not the only one hampering agricultural supply.
In the Horn of Africa, swarms of locusts – the worst in 70 years in some countries – have slashed domestic output, increasing reliance on now unreliable international markets.
Somalia, as a single example, used to import 92 per cent of its wheat from Russia and Ukraine, but now those supply lines are mostly blocked, leaving an estimated 13 million people in the country on the verge of starvation, according to UN estimates.
A further 25 nations, from Afghanistan to Ethiopia, traditionally acquire more than 50% of their wheat from Russia and Ukraine.
Having so many eggs in one breadbasket has unveiled the fragility of the global system.
Left unchecked, the situation will only worsen.
While it is in everyone’s interest to keep exports flowing, many major producers will become wary of running short themselves, slashing food exports in an effort to protect their own supplies – something already seen in India.
Trade finance and intervention from multilaterals are needed to help prevent the world from becoming a prisoner in this particular dilemma.
In this issue, we dive into the global food crisis, hearing from commodities experts, data specialists, and technology providers who provide their insights on the current situation.
We will also look at other macroeconomic phenomena that are turning the tides of trade finance, such as rising inflation, declining correspondent banking, changing green energy needs, and a major step forward in the digital trade agenda.
Let’s dive in!
Deepesh Patel & Carter Hoffman