With a war at the doorstep of the European Union, global cereal supplies are now facing shocks unseen in decades. Today, Russia and Ukraine together account for 29% of the world’s wheat supply. As the escalating conflict between Moscow and Kyiv has further increased the threat of food insecurity, grain-importing countries must prepare for the far-reaching end of supply. This holds true particularly when it comes to a region where food insecurity is a constant threat, with just a few exceptions. As Putin’s forces are gaining ground in Ukraine, a further increase in the price of bread could severely destabilize countries in the Middle East and North Africa region (MENA). Rising costs would inevitably challenge states such as Turkey, which imports essential cereal supplies from Russia and Ukraine. The same applies to most economies in the Arab world, such as Egypt – the world’s largest wheat importer – Algeria, and Tunisia.
Spiraling food costs and a similarly intense rise in energy prices have flared widespread public anger in these countries, specifically in relation to bread which is a politically charged commodity. Morocco is less dependent on cereal imports than its Maghreb neighbors but is experiencing its worst drought in decades. As a result, a surge in food costs could force the kingdom to increase imports and subsidies. As the largest importers of barley globally from Ukraine and Russia, oil-rich monarchies like Saudi Arabia fear a severe impact on their livestock industry. Nonetheless, war-torn and fragile states that are dangerously close to famine, such as Lebanon, Syria and Yemen, would probably face the worst outcomes. With the conflict unfolding in Ukraine, these countries are likely to face swift food prices increase that, in turn, could exacerbate the appalling humanitarian conditions.
Together with tourism, international trade will be the pillar where the Ukrainian crisis will impact Egypt the most. In this regard, cereals – especially wheat and corn – are on top of the commodities that the crisis will negatively affect. As for corn and soybeans, Egypt imported $1.7 and 1.4 billion in 2019, respectively, and their prices increased by up to 50% immediately after the outbreak of the conflict – which, in addition, will undoubtedly affect the prices of local meat. As for wheat, Egypt is the largest importer globally. Among grain exporters, Russia is ranked first, and Ukraine comes fifth. The price of this commodity rose by 18% immediately after the outbreak of the conflict, and there is no doubt that if this rise continues, it will negatively affect the net fiscal deficit, let alone the availability of sufficient wheat for consumption in the medium and long runs – especially in the event of a prolonged conflict.
The rise in wheat prices risks severely affect Tunisia, both in economic and political terms. Importing approximately 70% of its cereals needs, Tunisia is highly exposed to food inflation. More than half of its wheat imports come from Russia and Ukraine. The government has denied the possibility of intervening in the food subsidies system. Still, fears are rising about its economic sustainability in the long term due to the harsh economic crisis the country is facing. The fragile Tunisian food system has already shown signs of distress. In recent months the government has been unable to pay for wheat shipments (with ships waiting for weeks in front of the Tunisian coasts), and shortages of products like flour and semolina have been recorded. The government blames speculators and administrative dysfunctions, but the real question is if it will be able to face the economic burden of rising prices and ensure supplies and if the current crisis will exacerbate already existing social tensions.
Rising food and commodity prices from disruptions to global supply chains, inflation, and the impact of a drought that is devastating the domestic agricultural sector is causing Moroccans to express growing anger as they struggle to afford the rising cost of food. The drought and the high cost of food imports are adding to the challenges Moroccans are faced with, following over two years of economic disruption from the pandemic. So is the disruption of the Russian invasion to Ukraine – from which Morocco imports wheat. The government is trying to alleviate some of the current pressures by providing farmers’ support and subsidizing local markets to keep prices down. However, the economic progress that Morocco has realized over the past decade has not meant more security for its citizens, and this is what the current crisis is ultimately about. It highlights the consistent economic fragility of many Moroccans and that Rabat will have to make up for lost time as it navigates the ongoing economic impact of the pandemic.
‘War in Ukraine: A Food Crisis in the MENA Region?’ — Article by a Team of Authors — Italian Institute for International Political Studies / ISPI.