World Grain - June 2022 - 10

NEWS REVIEW
Food supply expert paints
grim global picture
NEW YORK, NEW YORK, US - Global wheat inventories
currently stand at about 10 weeks of global consumption, a
food supply expert said during a special meeting of the United
Nations Security Council on May 19.
Sara Menker, chief executive officer of Gro Intelligence,
an organization that gathers and analyzes global food and agricultural
data, said she disputes official government agency
estimates that put global wheat inventories at 33% of annual
consumption, countering inventories are closer to 20%.
" It is important to note that the lowest grain inventory levels
the world has ever seen are now occurring while access to
fertilizers is highly constrained, and drought in wheat growing
regions around the world is the most extreme it's been in
over 20 years, " Menker said. " Similar inventory concerns also
apply to corn and other grains. Government estimates are not
adding up. "
Menker told the security council that while much of the
blame for the burgeoning food security crisis has focused on
the Russia-Ukraine war that has severely limited agricultural
exports from that region, it has merely " added fuel to a fire
that was long burning. "
" I share this because we believe it's important for you all
to understand that even if the war were to end tomorrow, our
food security problem isn't going away anytime soon without
concerted action, " she said.
Menker cited five major factors occurring simultaneously
that are " each individually extraordinary. " They are:
* Lack of fertilizer
* Climate disruptions
* Record-low inventories in cooking oils
* Record-low inventories of grains
* Logistical bottlenecks that already have started to unravel
decades of global economic progress.
Global fertilizer prices have nearly tripled year-on-year and
quadrupled over the past two years because of supply shocks
driven by logistical bottlenecks, restrictions on natural gas that
impact the ability to produce fertilizer, and sanctions and export
restrictions amidst the Russia Ukraine war, Menker said.
" This risks significant crop yield reductions in key producing
regions, such as Brazil, the United States, and Western
Europe later this year and next year, severely impacting global
food security and inflation for the next three to five years at a
minimum, " she said.
Global drought conditions for wheat are the worst in over
20 years around the world. The United States and Brazil, the
world's two largest exporters of agricultural products, also are
experiencing extreme droughts.
The price of traditionally cheap palm oil has nearly tripled
in the last two years, driven by increased biofuels demand,
drought in regions that produce alternative cooking oils such
as Brazil and Canada, record import demand from China and
the loss of nearly 75% of global sunflower oil exports due to
the Russia-Ukraine war. The recent export ban in Indonesia,
the world's largest palm oil producer, which is responsible for
60% of global production, has added significant upward price
pressure to vegetable oils, Menker said.
As for grains, Menker said verifiable data from public and
private sources that Gro Intelligence organizes and then builds
statistical models to connect the dots between its platform
shows that global wheat inventories are at a level not seen
since the financial and commodity crisis of 2007 and 2008.
Logistical challenges, which began at the onset of the pandemic
more than two years ago, have been exacerbated by
other factors such as the Russia-Ukraine war, Menker said.
" Russia and Ukraine used to provide nearly a third of the
world's wheat exports and are in the top five exporters of
corn globally, " she said. " Combined, they used to export 75%
of global sunflower oil supplies. All Ukrainian ports remain
closed, making it impossible to move any of Ukraine's harvested
grain across its borders. Shifting to rail will move less
than 10% of the prewar flow. It's not enough. Russian exports,
which also include fertilizer, are limited because of Black Sea
maritime hazards. "
Gro Intelligence estimates show that price increases in major
food crops year to date has made an additional 400 million
people food insecure.
" Without substantial immediate and aggressive coordinated
global actions, we stand the risk of an extraordinary amount
of both human suffering and economic damage, " Menker said.
" This isn't cyclical; this is seismic. "
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June 2022 / World Grain / www.World-Grain.com

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World Grain - June 2022

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