Biden was the first G7 leader to admit publicly that many parts of the world will be experiencing food shortages, and yes, famine. In truth, the world will be short of many commodities. We are already seeing some regions where inventories are dangerously low, like in the Middle East and Northeastern Africa. The world will soon find out that the pandemic felt more like a dress rehearsal compared to what is about to happen.
This is of course because of the Russian invasion of Ukraine. Russia and Ukraine combined export over a quarter of the global supply of wheat and one-fifth of the world’s corn supply. With limited or no access to fuel, farmers in the region can’t even think about putting anything in the ground right now. Saying that Ukraine is Europe’s breadbasket is an understatement. Half of Africa’s wheat imports come from Ukraine and Russia, which is also a major fertilizer exporter. Because of sanctions, Russia can’t sell to anyone, except perhaps China.
To make matters worse, the UN World Food Programme or WFP, the largest such program in the world, and the winner of the Nobel Peace Prize in 2020 has lost one of its most significant contributors: Ukraine. Last year, Ukraine was the largest single source of food for the program, providing 9 per cent of the total food provisions managed by the WFP, which was already carrying a deficit due to complications brought forth by the pandemic. Countries in need may not be able to rely on the program this year. So, the world has a problem of great significance on the horizon: facing food shortages with almost 8 billion people on the planet. This is simply unprecedented.
Consequently, all eyes are now on North America to make up the losses generated by the conflict and subsequent sanctions. Many are expecting, or at least hoping, that farmers will plant more this year. But relying on certain quantities planted by farmers can be problematic. Input costs like fertilizers and fuel are going up even more than the price of grains, like wheat. If the conflict ends within the next month, although good news for the world, farmers may end up losing with prices plummeting, and they are keenly aware of this agonizing possibility.
Mostly unknown in Canada is the fact that Canpotex, a Saskatchewan-based company, is mandated to sell fertilizers to the rest of the world for export markets. It’s owned by both Nutrien and Mosaic, two gigantic powerhouses in the industry. In other words, Canpotex helps both of these companies to collude and inflate prices on world markets. This model is archaically perilous to global food security, and this year’s predicament makes this painfully obvious. Canada and Saskatchewan have supported a supply-side economics scheme for many decades, which drives prices higher. Production has been adjusted based on market prices, which is why Nutrien opted to increase its production by 20 per cent recently. If prices were to drop, mines would close. Simple, but incredibly irresponsible. Canpotex was set up to counter another cartel in Belarus that no longer exists. The issue will eventually need to be addressed.
But for this year, some things can be done. To help farmers right now, agriculture really needs a complete rollback of taxes and adjustment of our emission reduction targets. Both levels of government, federal and provincial, can do something about this. It is unreasonable, and frankly irresponsible, to continue to honour our environmental objectives when many could potentially die from hunger in months to come. Farmers will need all the help they can get.
The food to fuel issue is another lingering challenge we face. About 65% of corn grown in North America is for biofuel production. For this year, in particular, food should be considered a priority for businesses and governments involved.
It is highly unlikely Canada will experience severe food shortages. Nonetheless, many countries, including Canada, will face a real and harsh dilemma in the coming months, trying to balance our nation’s own food security while helping other regions of the world. The WFP and other organizations will come knocking on Canada’s door asking for more help.
Food affordability has been and will continue to be a growing issue. Many families are falling behind as wages are not keeping pace with rising food prices. But in the grand scheme of things, we honestly need to feel lucky just to see food on grocery shelves. This is how bad it will get.
