In recent weeks and months, the world and even Russian media have been talking a lot about the coming food crisis.
The prerequisites for this crisis were formed even before the war in Ukraine,
but this war itself became their catalyst and a kind of trigger.
This whole story greatly affects the current situation with the war and the attitude of Western countries towards it.
In our news, this usually goes in the background between front-line reports,
but it is important to understand that in developed Western countries,
the discourse is gradually shifting from the horrors of war to the horrors of future famine and the risks associated with it.
The expected food crisis can take many times more lives than war,
it can affect developed countries, but it will hit developing countries especially hard.
The exit of the two largest food producers in the world from the world market is an unprecedented event
and the focus of attention of world leaders may gradually begin to switch to this problem.
That is why it is important for us to understand it.
And today we will find out with you in great detail –
what kind of food crisis is this, why it can develop,
how it will affect the world and how it will affect the conflict between Russia and Ukraine.
First, let's understand what a food crisis is.
Like any crisis, the food crisis is a series of mistakes and wrong decisions by many market participants.
People and systems are fundamentally imperfect—there will always be bugs.
But in the field of food, there are additional factors – first of all, of course, natural ones:
droughts, floods, plant diseases and invasions of various insects devouring your crops.
All this can provoke a local crisis in any country,
when the poorest segments of the population simply do not have enough money for a basic food basket,
and if your country is poor, famine will begin.
Hunger itself is not a new phenomenon for mankind.
It has been going side by side with our civilization from the very beginning, along with diseases and wars.
And as a rule, all these misfortunes came to people at the same time.
Because the backward agrarian economy stood on the principle of «what goes around comes around».
And when everyone left to fight, there was no one to sow – famine began,
and the logical result of malnutrition was a decrease in collective immunity and, as a result, the development of various diseases.
This is where all these biblical stories come from, describing the apocalypse as the coming of war, famine with disease and, ultimately, death.
This scourge has haunted any society and state for centuries.
We will not go into historical examples, but we will say here that, unfortunately, the horrors of hunger are still a reality of our civilization.
Already at the end of the 19th century, the best thinkers and philosophers of that time understood that the causes of famine in modern times are economic,
and that with a stable economy and the well-being of people, there will be no hunger.
And the latest crisis is a living example of this.
In 2007, droughts across the planet and the financial crisis pushed food prices up.
As a result, more than a billion people on the planet,
living on one dollar a day, could not buy food in the quantities they needed and faced malnutrition.
I spoke in detail about the causes of the crisis in my other video.
In fact, we have caught this time with you.
We live in relatively rich countries (at least compared to some parts of the world like Asia and Africa),
and famine isn't a common thing. That's why we never noticed the problem beforehand.
Just imagine, while some of us were studying or building a career,
our peers made every effort to eat at least once every couple of days.
The result was social unrest and instability in a number of countries.
A number of authors even suggest that it was the food crisis that, having affected an already not very stable and well-fed region,
provoked the Arab Spring and the change of governments from Tunisia to Syria.
After all, if your country is poor, economically unstable,
does not particularly supply any goods to foreign markets, then buying food for you will be a problem.
And its absence provokes not only a rise in prices, but also the social and political crises that follow it.
It is difficult for people to understand the causes of the food crisis and the problems of their country.
They see that yesterday's meat has risen in price to prices beyond their reach,
and bread has become 2-3 times more expensive, or there are simply no products on the shelves.
well that is in case of attempts to build communism in a country.
And then they naturally blame their politicians and the government for this.
Hunger riots begin. Like recently in Iran.
The first unrest affected Iran, when local authorities announced
that they could no longer contain the rise in prices,
residents rushed to supermarkets to buy essential goods and groceries.
After it became known that the cost of them soared by as much as 300%,
crowds of protesters attacked stores and warehouses and staged a massive robbery there.
Today, there is enough food on the planet for all people in all its most remote parts.
The modern world, thanks to technology, science and industrialization, produces more products in all their diversity than humanity can consume.
But if the government systematically leads its country to poverty and degradation, and its economy is gradually fading away,
then along with other problems, there will be hunger in the country.
Where uneducated, corrupt politicians, kleptocrats and dictators of all sorts, military field commanders and just bandits rule,
you cannot build a normal economy there.
This means that there will not be not only high, but at least average salaries,
and with the slightest instability, people who are already on the verge of survival will be on the verge of death.
At the same time, in developed countries, in market conditions and in normal times, all this is easily compensated by imports.
Have we had a drought and crop failure this year?
It's embarrassing, but not scary. We buy food from neighbors.
Of course, the economy of the country in which this happened will suffer, but not significantly.
People will not starve and will not die.
A crop failure in one region is easily compensated by a harvest from another.
This is not my personal opinion, I am not an expert in food security –
the UN came to the same conclusion.
According to them, the risk group is primarily people living on $1 a day.
That is, $7 a week is about 2,000 rubles a month at the end of May 2022. There are many people like that in the world.
Back in 2020, according to the UN World Health Organization, seven hundred million people were undernourished daily.
Everything is clearly visible on this map.
Most of the hungry live in Asia, and in Africa, which ranks second, where 19% of the population is undernourished,
the fastest increase in their number is observed.
The third place is occupied by the region of Latin America and the Caribbean – more than 7% of the population goes hungry there.
And the UN has set the global goal of humanity to reduce the number of hungry people to zero by 2030.
It would be quite possible!
If not for one elderly dictator who decided to fight in the center of Europe in the 21st century.
Let's see how it happened that the actions of one insane person led to the threat of hunger on the entire planet?
The entire food system is tied to many countries and after two covid years was in a state of shock.
In addition, this time was also superimposed by the economic crisis caused by the lockdown, the closure of many ports and countries.
Standard problems from droughts to floods have not been canceled either.
Even before the invasion of Ukraine, the UN's World Food Program for providing food to starving countries warned
that 2022 would be a terrible year.
And the food market, already in limbo, was thrown off the cliff by the actions of Russia.
The global food crisis expected this year is directly related to the Russian invasion of Ukraine.
Unfortunately, Russia does not even imagine how much harm he was able to cause not only to Russians and Ukrainians,
but to all of humanity after the start of the war.
There are two factors here.
Firstly, after Putin started the war, economic sanctions and bans were imposed on Russia,
and our companies can no longer supply products to the world market,
cannot rent ships, and face various problems in this area.
That makes Russian grain inaccessible to buyers.
Secondly, the main agricultural regions of Ukraine are under daily fire.
Here is a map of especially valuable agricultural lands.
If we superimpose it on the map of military operations, we will see that most of the necessary fertile land falls precisely on this zone.
In addition, the Russian fleet is blocking the sea routes from Ukraine,
which is why it is simply impossible to take out the food already collected and ready for sale.
In addition, the Ukrainians, preparing for the defense and landing of the Russians, mined their shores.
Why is all this important?
The fact is that Russia not only provided food for itself,
but also sold a significant amount of food to countries around the world,
occupying, for example, more than one-fifth of the share of all countries on the world grain market alone.
And also in the market of barley, corn and other crops.
Ukraine also annually exported grain, which was enough for four hundred million people around the world.
It was also the largest exporter of sunflower oil worldwide.
Together, the two countries provided almost 30% of the world's wheat and barley production,
75% of sunflower oil and 15% of corn.
But people consume not so much specific foods as calories.
So we and the Ukrainians supplied 12% of the calories sold and consumed in the world.
Just imagine – this is a colossal amount of food consumed by the inhabitants of our planet every day.
Due to the war, wheat prices rose by 53%.
This has undermined food security all over the world, and not only in those countries where this security did not exist anyway.
With his intervention, Putin set off a domino effect.
After all, as soon as prices soared, other countries were forced to respond to these changes.
And some of them also went to restrictions on the export of their products.
So, on May 16, India announced that it would suspend its exports.
That pushed the price of wheat another 6% up.
The high cost of food according to the UN has already increased the number of people
who do not have enough food from four hundred and forty million people to one billion six hundred million people.
Almost 4 times in 3 months!
Of these, two hundred and fifty million are on the verge of starvation.
A number of countries, following India, also began to close the sale of their products.
The process of restrictions has already been launched, and prices continue to break records.
This situation will hit poor countries the hardest, where, according to various sources,
the average family spends 25 to 40% of their income on food.
In Egypt, for example, bread provides 30% of all calories consumed.
But that's not all.
The food crisis unfolding before our eyes, according to the experts of the authoritative world magazine The Economist,
is terrible in its prospect, not in the moment.
This is not 2007 or 2008, when it was clear what caused the rise in prices and when it would end.
The thing is that Russia's war in Ukraine, having started because of nothing,
can end at any moment, or it can last for years, until our power is replaced by a normal one.
it's impossible to predict.
This will lead to the fact that the Ukrainian fields will not be sown next year.
And because of the sanctions against Russia, our farmers and enterprises will not be able to purchase the necessary seeds,
usually supplied from Europe, and pesticides, also purchased from the West.
The result predicted by experts is the disruption of the next harvest in 2023.
Тhere are still other factors.
The rise in oil and gas prices provokes an increase in the price of gasoline used in transportation
and agricultural machinery and an increase in prices for various fertilizers.
The cost of conventional electrical energy is also rising.
As a result, fewer crops than necessary will be planted and harvested around the world,
further accelerating this food crisis, moving into the future.
While we were preparing this video, more than 23 countries around the world
have banned their companies from selling food, from Kazakhstan to Kuwait.
And Russia, instead of trying to resolve the crisis, proposed to all members of the EAEU to ban the export of grain,
thereby further shaking the situation.
If trade stops, famine will set in in all countries dependent on food purchases.
Millions will be on the verge of death.
How serious is the situation overall?
Like any economic problem, this war-locked supply shock can only be approached in a multiple angle regime.
On the one hand, in the long run, nothing terrible.
Yes, there will be an increase in food prices, it is already happening,
and the increase in prices is not only for those items that have been blocked.
An increase in wheat prices will pull an increase in corn prices,
an increase in sunflower oil prices will pull an increase in prices for all other types of edible oils,
an increase in feed prices will pull an increase in prices for milk and meat and further along the chain.
For developed and some developing countries, for all countries where the majority of citizens
do not spend most of their income on food, this will not be very good, but not exactly a crisis.
For poor countries, this will mean a sharp increase in the cost of food
as a result – the same sharp drop in spending on everything else,
causing suppliers of everything else to lose their jobs,
be able to buy even less food, and so on in a spiral.
The poorest countries, countries where people are teetering on the brink of physical survival, will have a hard time.
People there will live beyond this line.
Will this effect be long term?
No, it will not.
Mankind knows how to produce food very efficiently, developed countries produce much more food
than they are able to consume, and the resulting shortage will simply lead to an explosive
growth in agricultural production and the problem will be solved.
In practice, we will face what we have seen more than once in history:
a local skew in time between supply and demand due to a supply shock.
Such distortions are sometimes large-scale, very large-scale like the oil crisis of the 70s,
but never long-term, simply because of the nature of the market economy.
On the other hand, at a moment in time this is indeed a very serious challenge:
the voters of rich democracies will now become somewhat poorer,
poor countries will become significantly poorer, people in the poorest countries may die of hunger.
Moreover, it doesn’t matter if they consume wheat and sunflower oil or have not seen them in their eyes,
they will also not be able to afford corn, rice and palm oil,
because thise will take the place of the departed goods and increase in price.
Putin deliberately blackmails the whole world with the welfare and lives of people.
He clearly shows that he is ready to sacrifice anyone, not only Ukrainians, Russians,
the Ukrainian and Russian economies, the future of the two countries,
he is ready to kill an arbitrary number of people in distant Asia, just to save his failed project.
World leaders, dealing with such a scumbag who is ready to use everything that he can reach for blackmail,
cannot but react to this. Yes, in the long run,
Russia will simply lose its food market forever and no one will want to do business with it,
other producers will take this profitable place, but right now, at this moment in time,
a real threat has hung over the world and something needs to be done about it.
And they will negotiate with Putin.
It is clear that no one will negotiate with Putin on his terms.
Nevertheless, the attempt to starve the world is the most serious foreign policy move since the beginning of this war,
to which it is not yet clear how to respond.
But in the long run, everything is clear.
Humanity makes mistakes and can be wrong, but it learns from them.
And Putin taught humanity a very important lesson:
when you allow personalistic autocrats in a large and important country,
you don't even realize the scale of the problems you will face.
Do not console yourself with the illusion that he will stay within his borders
and confine himself to the palace at the expense of his citizens, no. He will come to you.
See you tomorrow.