Conflict, Covid-19 and climate - what does this mean for trade?
Recently, David Beasley, Director of the World Food Programme, described the war in Ukraine as ‘part of a perfect storm’ of conflict, Covid and climate crisis. It’s a sobering reminder of the way in which regional events impact global trade – and the consequences for vulnerable people across the whole world.
Whilst events like this may initially seem distant from the lives of Kenyan farmers or Bangladeshi garment workers, the climate change and Covid -19 crises demonstrate just how closely global supply chains link us all together.
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Here in the UK, we’re reading headlines about rocketing petrol prices and the biggest cost of living rise in decades. But for the communities Traidcraft Exchange works with around the world, the impact of this ‘perfect storm’ is even more acute – and it’s set to get worse.
Maximo Torero, chief economist of the Food and Agriculture Organisation and a global expert on food supplies, expressed similar fears - “My greatest fear is that the conflict continues – then we will have a situation of significant levels of food price rises, in poor countries that were already in an extremely weak financial situation owing to Covid-19. The number of chronically hungry people will grow significantly if that is the case.”
Ukraine and Russia produce more than half of the world’s supply of sunflower oil and about 30 percent of the world’s wheat. The World Food Programme buys over half its supplies of wheat from Ukraine.
Right now, instead of planting crops, Ukrainian farmers are being forced to take up arms to defend their country. And in China, it was recently revealed that severe flooding last year has delayed the planting of a third of this year’s wheat crop – meaning harvests are expected to be severely reduced. Globally, there will be a shortage of food for export, resulting in rising prices.
The Covid-19 pandemic of the past two years has already weakened the resilience of food systems across the world - something Traidcraft Exchange staff saw first-hand in Bangladesh, India and East Africa, as markets closed during lockdowns, harvests were left to rot in fields, and supply chains were severely disrupted. During the pandemic, the number of hungry people globally rose by 18%.
When food prices rise, the poor are hit hardest, as they already spend a greater proportion of their income on food; this is true both here in the UK and across the world. Climate shocks, such as flooding in Bangladesh or drought in East Africa, combined with rising global prices make it harder for communities to produce enough food to feed themselves. Global stockpiles of food are already running low, and many nations have begun to impose restrictions on exports, especially in North Africa and the Middle East. Meanwhile, World Trade Organisation chief Ngozi Okonjo-Iweala has warned that countries with surpluses should release them onto world markets or risk making the food crisis worse.
The global trade system is simply not set up to protect the livelihoods and safety of most people across the world. Instead, it actively exploits the most vulnerable, especially in times of global crisis. For example, in 2020, in the garment industry aslockdowns in the UK led to fewer clothing purchases, big brands reduced or cancelled their ordersat very short notice – ultimately leading to reduced or no income for thousands of vulnerable workers in the garment industry.
We are all connected through trade and our reliance on food supply chains, but we don’t all benefit equally. The world’s ten richest men saw their wealth double during the Covid-19 pandemic, whilst 99 per cent of the world became worse off. If global food prices continue to rise, and if the war in Ukraine persists, we can expect to see things get even worse for those already struggling.
As UN Secretary General Antoni Guterres told reporters on 14th March, “All of this (along with record inflation) is hitting the poorest the hardest and planting the seeds for political instability and unrest around the globe”.
The world faces multiple, connected crises – Covid-19, conflict and climate, and it is the most vulnerable communities who are on the frontline. The fight for a fairer trade system based on economic justice has never been more urgent. Will you join us?