Tue. Jul 5th, 2022

This is a sombre post on sombre topics.

We all know that there are several interrelated issues at play in producing a food insecurity in this country which could well approach a situation where not only are shortages of foodstuffs widespread, but where some people are unable to access staple foodstuffs, or (unlikely) that there is formal rationing. What we do not need is self-serving newspapers trying to convince us that this is NOT the fault of a) Brexit, or b) the Tories.

The existing shortages and deficits are, and will continue to be, multifactorial. Some of those factors originate in the UK’s peculiar position, some are global.

Firstly, Brexit interposed barriers to trade and has led to supply and demand issues, and higher prices.

Secondly, Covid led to a diminution in production and disruption of supply chains which has, as yet, not worked itself out of the system because Covid has not worked itself out of the system either.

Thirdly, production/releaseshortages of fuel, delays in fuel supply, and the impact on fuel supply of the war in Ukraine have led to higher production prices, higher transport prices and higher retail prices.

Fourthly, the reduction / complete cessation of exports of crucial goods from Ukraine and Russia is leading now, and will continue to lead for the next two years at least to a reduction in food supply in absolute terms. This in turn has led and is going to continue to lead to price rises in goods in short supply, protectionism in countries which have hitherto produced those goods but are now producing less of them and won’t export, and diversion of pressure onto those goods that can take the place of those in short supply with consequent shortages and price rises.

Fifthly, the increased costs of production of fertiliser, the increased costs of fertiliser, and the reduction in supply of fertiliser because of the situation in Russia means that many of the goods that are produced, or are going to be produced will be produced in smaller volume and lower quality, both because farmers can’t afford fertiliser or pesticide) and so yields will be reduced, and because if farmers can’t afford to plant, nurture or fertilise a crop, and subsequently pick and pack it, they aren’t going to waste money planting it. This does not just apply to vegetable goods, but also to the production of livestock and dairy products.

Sixthly, at times of shortage there is almost always cartel buying, where groups of merchants control the prices of goods. Typically, this leads to producers or owners of goods in short supply agreeing to sell them at inflated prices – and the countries or organisations with the smallest purchasing power being starved out of the market.

So, yes, this is the perfect storm.

Are we all aware of it? Yes.

Are there shortages now, and are they likely to increase? Yes, and yes.

Is there likely to be rationing? It’s unlikely for two reasons. The first is that the government can’t organise a piss-up in a brewery (although it’s done rather better in organising piss-ups in 10, Downing Street) and it’s unlikely to be able to organise rationing, which is actually quite a complex process. The second is that we have a libertarian (NB, not the same as liberal) government which believes in the free market, in which the strongest survive and the weakest . . . don’t. Mogg thinks food banks are “uplifting,” secure in the knowledge that he will never have to use one.

Labour is currently trying to organise a government rethink on the cost of living crisis, given the number of people who are unlikely to be able to manage to eat OR heat this winter. It may or may not succeed. Unfortunately, Labour suffers from the internal division stoked by the “Corbyn was robbed” brigade, who prat around on social media complaining that Starmer isn’t a true socialist. Yes, Corbyn was robbed, and no-one regrets it more than I do, since I voted for him. No, Starmer isn’t.  But he’s the only alternative to more Tories, ok? All those saying “Oh, I’d sooner abstain than vote for Starmer: look at what that nearly led to in France, where Macron has just admitted that he knows people didn’t vote for him, they held their noses and voted to stop Le Pen’s fascists.

Do we need articles on rationing and shortages from the Daily Mail, or the Express? NO. They aren’t helpful.

What can we do about the prospect of a hard winter?

We can prep: it’s what we do. We can reduce our energy use, heat people not space, and think about local resilience.

What’s local resilience? We can organise local solidarity either with our neighbours or with like-minded groups of friends. As an example, on June 3rd, my lovely neighbours with the big garden will, (prompted by me) organise a tea party for the members of my small street, 11 families in total. We’ll be discussing, tactfully, what everyone’s needs are, and how we can help each other if we need to. We’ll be making links, and improving our understanding of each other, and gently discussing the importance of preparing for hard times ahead. Start small, start local: it’s at least action, rather than passively sitting around and waiting for the shit to hit the fan. Also, in reference to my lovely neighbours, their son returns from his boat building course in May. He’s a good gardener, and a handy lad, and I’m going to suggest to him that there is nothing wrong with converting some of that lovely big garden to vegetables. My neighbours down the road, (she’s Russian, he’s Indian) already grow lots of veg and fruit. (Her father was a farmer. You should have seen her smile politely at my three precious watermelons last year: her father grew fields of them.)

Ok, that’s that. Now what about some news? Where have my news bulletins been?

Seeing my daughter off back to Australia and teaching panicking GCSE and A Level students took priority last week. I can’t simultaneously teach 7 hours a day across several subjects, with the preparation that entails, and write articles that take two hours to research. Besides, to be blunt, teaching pays for my (increasingly expensive) bread. This doesn’t.

Ukraine

The news is that now that Russia is throwing everything it has against south and east Ukraine, some media outlets are saying that it seems possible that Putin will succeed in his aim of taking Ukrainian territory. Their thinking is that he will escalate the bombing of cities until he can claim to have achieved a victory of sorts in time for May 9th, which is when Russia celebrates its victory over the Nazis in WWII. Given that this war was, from the outset, propagandised as a “war against the Nazis in Ukraine,” it makes sense for Putin to want to claim a victory at this point. As for the ultimate aim, for now, I think he will stop if he can take all of the south coast and completely cut Ukraine off from access to the Black Sea. Russian control of the Sea of Azov and the Black Sea is already impeding exports: Putin’s intention is to control the area completely.

Can he do it?

Russia has made minor advances in some areas since shifting its focus to fully occupying the Donbas, the UK’s Ministry of Defence tweeted in a regular bulletin on Monday. “Without sufficient logistical and combat support enablers in place, Russia has yet to achieve a significant breakthrough,” it said.

Ukraine’s defence of Mariupol has also exhausted many Russian units and reduced their combat effectiveness, British military intelligence said.

America is positive about Ukraine’s ability to hold out. Russia is failing in its war aims but Ukraine is succeeding, U.S. Secretary of State Antony Blinken said on Monday after he and Defense Secretary Lloyd Austin met President Volodymyr Zelenskiy and Ukrainian officials in Kyiv.

“In terms of Russia’s war aims, Russia has already failed and Ukraine has already succeeded,” Blinken told a news briefing in Poland after the two officials returned from the meeting, which ran three hours instead of an allotted 90 minutes.

The United States took the opportunity of the first official U.S. visit to Ukraine since Russia’s invasion two months ago to announce a gradual return of U.S. diplomats to the country and the nomination of a new ambassador. Russia calls its actions in Ukraine a “special operation”.

The cabinet secretaries also pledged new assistance worth $713 million for Zelenskiy’s government and countries in the region, where Russia’s invasion has raised fears of further aggression by Moscow.

What else in Ukraine?

Russian forces again attempted to storm the Azovstal steel plant, the main remaining Ukrainian stronghold in Mariupol, Ukrainian officials said, adding that more than 1,000 civilians are also sheltering there.

Russia’s defence ministry said its high-precision missiles struck nine Ukrainian military targets, including four arms depots in the Kharkiv region, where artillery was stored. Russia forces have failed to capture any major city since they began their invasion on Feb. 24.

Russia has deployed Iskander-M mobile battlefield missile launchers within 60 km (40 miles) of the Ukrainian border, Ukraine’s military said. Each of the system’s two ballistic missiles has a range of up to 500 km (300 miles) and can carry conventional or nuclear warheads.

Ukrainian president Volodymyr Zelenskiy said “light would defeat darkness” as Ukrainians observed a bitterly emotional Orthodox Easter. Ukrainian refugees filled churches across central Europe for Orthodox Easter, giving thanks for escaping a Russian invasion and dreaming of a return home. Ecumenical Patriarch Bartholomew, the spiritual head of Eastern Orthodox Christians worldwide, called for the opening of humanitarian corridors in Ukraine where he said “an indescribable human tragedy is unfolding”.

Putin also attended an Easter Service. One wonders from which God he was seeking approval.

What would happen if Putin succeeds in taking the southern coast of Ukraine?

The Guardian reports that a senior Russian military commander has said the goal of Russia’s new offensive is to seize control of southern Ukraine and form a land bridge to Crimea, indicating that Russia plans a permanent occupation of Ukrainian territory taken in the war. Rustam Minnekayev, acting commander of the central military district, also told members of a defence industry forum on Friday that control over southern Ukraine would give Russia access to Transnistria, a pro-Russian breakaway region of Moldova, indicating that Russia may attack the port city of Odesa or launch an economic blockade of the area.

The remarks directly contradict earlier claims from Vladimir Putin that Russia was not planning to occupy Ukrainian cities permanently and suggests the Kremlin is changing tack after its failed offensive toward Kyiv, which appeared to seek regime change.

The statement was the first by a high-ranking official about the Russian military’s goals to occupy territory as it manoeuvres for an anticipated “battle for Donbas” in Ukraine’s east.

“Since the beginning of the second phase of the special operation … one of the tasks of the Russian army is to establish full control over Donbas and southern Ukraine. This will provide a land corridor to Crimea, as well as affecting vital objects of the Ukrainian economy, Black Sea ports through which agricultural and metallurgical products are supplied to [other] countries,” Minnekayev said on Friday at the annual meeting of the Union of Defence Industry Enterprises of Russia’s Sverdlovsk region.

What would be the global consequences of Ukraine’s inability to control its exports via the Black Sea?

The World Trade Organisation reports that some regions will be more strongly affected by the war than others. Europe, being the main destination region for both Russian and Ukrainian exports, is likely to experience the brunt of the economic impact. Reduced shipments of grains and other foodstuffs will also boost prices of agricultural goods, with negative consequences for food security in poorer regions.

Russia and Ukraine are both large agricultural exporters, especially of grains (wheat, maize, barley) and sunflower products. Exports from Black Sea ports have been severely disrupted. Africa and the Middle East are the most vulnerable regions, as they import over 50 per cent of their cereal needs from Ukraine and/or Russia. In total, 35 countries in Africa import food and 22 import fertilizer from Ukraine, Russia or both. Some depend heavily on both countries for key staples such as wheat.

Ukraine’s ports are closed due to the war, preventing existing grain supplies from being exported, and in the absence of a swift ceasefire that permits farmers to return to fields, the disruption to spring sowing will lower future production significantly.

Current price hikes (25-30 per cent for wheat, 35 per cent for soybeans) will hurt net food importing countries, particularly low-income ones. Food and energy account for a large share of the consumption basket of developing economies, and in particular poorer households within them. The current crisis is likely to exacerbate international food insecurity at a time when food prices are already historically high due to the COVID-19 pandemic and other factors.

According to the Food and Agriculture Organization of the United Nations (FAO, 2021), low-income food deficit countries already saw their food bill rise 20 per cent in 2021, a US$ 120 billion increase including US$ 52 billion for Sub-Saharan Africa. The cost of providing food aid to people affected by the crisis and natural disasters has increased with the price of food, and the World Food Programme has appealed for additional financial support.

Other crops such as corn and barley are predominantly used for animal feed, and so have less immediate food security implications. However, higher prices for these grains would eventually lead to higher livestock and meat prices in rich countries. There could be further spill-over effects in other animal and vegetable products, possibly even beer.

Prices will also increase for crops that are not exported by Russia and Ukraine but that can serve as substitutes, as countries attempt to fill the gap in cereal imports with alternatives.

The price of rice has increased by 12 per cent since the beginning of the year while the price of oats has risen by 8 per cent. This effect on the broader agricultural sector is aggravated as the price of fertilizer is also surging because Russia is the largest supplier with a market share of around 15 per cent. Russia has announced that it will suspend fertilizer exports, but it is not clear whether the ban covers all
countries or just those actively opposing the war in Ukraine. Reduced availability of fertilizers would impact farmers through smaller crop yields and lower quality
output, not just in Ukraine but worldwide.

Importantly, fertilizer prices in early 2022 were already high, the result of high energy prices (natural gas in particular plays a pivotal role in the production of nitrogenous
fertilizers) and supply chain disruptions (including export  restrictions by some key exporters).

High food prices will further be reinforced by rising energy prices, which raise transport costs. The price of Brent crude oil rose from around US$ 78 per barrel
at the start of 2022 to US$ 130 per barrel on 8 March before falling back to US$ 110 per barrel in mid-March. Russia accounts for 9.4 per cent of world trade in fuels,
including a 20 per cent share of world natural gas exports. Several European countries stand out as being highly dependent on Russian fuel exports including Finland (63 per cent) and Turkey (35 per cent) Large European economies are exposed to a lesser yet still significant degree:


• Italy 22 per cent
• Germany 17 per cent
• France 12 per cent
• United Kingdom 12 per cent

In sum, disruptions of food markets are already having a significant impact on global food security, particularly through prices for grains and oilseeds. As seen with
the Arab Spring and food riots elsewhere, food price increases can create deeper political instability. The supply situation will need to be monitored carefully to avoid a wider tragedy.

So that’s globally. What does this mean for us? Is this linked to the recent reports on potential food shortages?

Meanwhile, Ukraine has banned exports of some agricultural commodities (rye, barley, millet, sugar) and has introduced export licences for its key export goods such as wheat, corn and sunflower oil. Russia imposed export prohibitions for food products such as raw sugar, wheat, meslin, rye, barley and corn.

With the exception of sugar, this export ban also includes members of the Eurasian Economic Union, with which Russia shares free customs zones. However, the Russian deputy prime minister for agriculture and industry declared that grain exports within the quota under individual licences would continue to be allowed.
Some countries announced trade-related restrictions on food, as a result of domestic considerations in the context of the crisis in Ukraine. For example, Argentina, Hungary, Indonesia, the Republic of Moldova, Serbia and Turkey announced export restrictions on products such as wheat, maize, sunflower oil, margarine, flour and soybean oil to all trade partners. Egypt has implemented a production licence scheme for wheat producers, which implies that farmers will have to sell a quota of their wheat to the government.

The crisis in Ukraine will have implications for global growth, trade and development. In addition to reshoring (this is producing food in a country, for the country)
and near-shoring, (importing food from the nearest producer outside the country) there will also be a move to ‘friend-shoring’, where strategically important goods are made at home or procured from allies.

A widespread push to reconsolidate global supply chains based on geopolitical considerations would come at immense cost for all economies in terms of diminished
growth, higher transaction costs and reduced innovation. The blow to growth prospects would be particularly large for the many developing countries, especially LDCs, (Less Developed Countries, e.g. Mali) that are not aligned with any bloc and do not want to have to ‘choose’ between alternative markets and systems.

There may be more concerns about the supply of food and agriculture products – similar to the shortages of medical products witnessed early in the COVID-19
pandemic, and now again by the effects of the war on food and energy markets. But the fact remains that resilience will ultimately be best served by fostering deeper and more diverse international markets, anchored in open and predictable trade rules.

Concentrating sourcing and production at home would create new vulnerabilities to localized natural disasters or disease outbreaks. When hurricanes hit, crops fail or factories are forced to shut down, trade is a critical means of adaptation. And if demand for certain products surges unexpectedly, even purely domestic supply chains will struggle to respond.

France

It’s a good thing that Macron was re-elected: it means that the EU is safe from Frexit for another five years, and that it won’t have another Putinista like Trump or Johnson in office. But the rise in support for the far right is extremely worrying, and I would remind you that it was in similar situations of global insecurity and depression that Hitler came to power. Fascism rises when people feel that they have no stake in the status quo. There are many people here who felt that they had no stake in the status quo, and that’s why we ended up with Brexit, which looks more and more like a fascist coup every day.

Macron, however, knows that his election was not a matter of people liking him and his policies, but a matter of people disliking Le Pen and her policies more. He has, as he says, won a victory, but not a triumph, and Le Pen increased her support massively from five years ago. Macron, while liked on the world stage is often seen as arrogant, elitist and out of touch at home: he’s got a hard drive ahead of him now, with all the horses in his chariot trying to go in different directions, and he’ll need strength and humility to get through. The parliamentary elections for France are in June: it remains to be seen what happens with those, and what sort of parliamentary support he can count on.

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