Latin America Advisor

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Will War in Europe Worsen Hunger in Latin America?

Brazil is seeking new supplies of fertilizer to replace the potential loss of supplies from Russia. A sugar cane field in Brazil is pictured. // File Photo: Brazilian Government. Brazil is seeking new supplies of fertilizer to replace the potential loss of supplies from Russia. A sugar cane field in Brazil is pictured. // File Photo: Brazilian Government.

Brazil, the world’s largest supplier of coffee, soybeans and sugar, is trying to secure new supplies of fertilizer after a call by Russia’s trade ministry to suspend fertilizer exports following the country’s invasion of Ukraine. Brazil imports approximately 85 percent of its fertilizers, a fifth of which come from Russia, The Wall Street Journal reported. What does the situation mean for Brazilian farmers and food prices? In what ways might Russia’s invasion of Ukraine exacerbate food insecurity in Latin America and the Caribbean? What should countries and international organizations do in order to prevent a rising level of hunger in Latin America as a result of the war?

Devry Boughner Vorwerk, member of the Advisor board and CEO of DevryBV Sustainable Strategies: “The Russian invasion of Ukraine is creating a ripple effect on global supply and demand of commodities and food items. Even before the invasion, food price indexes were on the rise, indicating a stressed global food system. Along with heightened demand and supply chain disruption from the pandemic, a significant reason for the stress is owing to increased energy prices that have contributed to high fertilizer prices, elevating the cost of production and limiting availability for farmers, especially smallholder farmers. Reduced access to fertilizers is one of the factors contributing to the latest estimates on South American production. For example, the USDA World Agricultural Supply and Demand Report (WASDE) issued on March 9 denotes an expected drop in production of soy in Brazil, Argentina, Paraguay and Uruguay for this crop year. Adding to the stress in the system is the reaction of governments worldwide to the growing food crisis. Governments are beginning to enact export bans, which creates panic buying in the market and further drives up prices. Argentina is the latest country to enact an export ban. Further, Russia, India and China are the main stockholders of food worldwide. The perfect storm has arrived, and net food importing countries in Latin America are facing higher food bills, which means less available food for its citizens. High food prices are linked to instability and governments across the region could experience food price riots as a result. International organizations are responding, with the U.N. secretary general forming a crisis task force on food, energy and finance. Latin American governments should align around unified approaches to policy, calling for no export bans, financial support for small holders to gain access to seeds and fertilizers, consumer safety nets, and should uniformly call for release of stocks in third-party countries such as China and India.”

Diana Chávez, executive director of the Private Sector Regional Centre for the Support of U.N. Sustainable Development Goals: “Conflict is a main driver of hunger and food insecurity in the world. The conflict between two leaders in the agriculture sector confirms the role of the industry in international development and the wellbeing of humanity. Ukraine is a vital supplier of grains; the World Food Program buys more than half of its wheat from Ukraine. Latin America is experiencing the effects of the conflict and needs to minimize its impact on the food supply chain and security. On Feb. 24, coffee and cocoa futures stumbled in New York by 2.5 percent and 3 percent, respectively. Brazil, the largest coffee producer in the world, was especially affected. Brazil’s reliance on Russia as a fertilizer supplier further amplified the impact. This week, the Brazilian minister of agriculture traveled to Canada to seek alternative suppliers. Ecuador, whose banana industry exports 22.5 percent of production to Russia and 2.5 percent to Ukraine, is also facing market challenges. Argentine agricultural companies have expressed concern about their trading relationship, logistical restrictions and payment delays. In order to avoid a deeper economic crisis and prevent hunger, international and local cooperation is essential. Policymakers, the private sector and civil society in the region need to come together to foster an inclusive conversation that incorporates farmers. A preventive approach that considers capacity building with a focus on sustainability, climate change and human rights will facilitate achievement of the Sustainable Development Goals. This would maximize resources and traditional knowledge to update the regulatory system, develop markets and transition to climate-smart commodities, while also advancing the zero-hunger goal.”

Johanna Mendelson Forman, distinguished fellow at the Stimson Center and adjunct professor at American University’s School of International Service: “We are facing a global food meltdown as the war between Russia and Ukraine continues. Latin America, where food insecurity increased due to a global pandemic, must now brace itself for higher prices for food and energy. U.N. sources noted that, as compared with 2019, 14 million more people in Latin America and the Caribbean were affected by hunger in 2020. Food protectionism in Argentina, manifested by new trade barriers on agricultural exports of wheat and cooking oil, are geared to safeguard domestic food supplies. Ukraine is a global supplier of rapeseed and sunflower oils. Brazil’s agriculture production of soybean and corn, major exports, has been affected by droughts. The country is also the largest fertilizer importer. Growers are worried about shortages from Russia, a major world fertilizer exporter, which announced it will make sales selectively to ‘friendly nations only.’ Similar situations confront other agriculture export giants such as Colombia and Mexico. Russia and Belarus are major exporters of fertilizer, a byproduct of petroleum, and now a sanctioned item. With energy costs rising, other Western producers of fertilizers, such as Germany, will be forced to pay higher natural gas prices to continue their own production. Short-run solutions to food insecurity will require increased support from the World Food Program, already stretched with hunger events in Syria and Yemen, to bulk up food supplies in Venezuela and Haiti. Sustainability strategies, however, will require greater initiatives within each country with strategic support from the Inter-American Institute of Agriculture Cooperation, whose focus on community-driven production and renewable energy projects for growing food may spur new interest, especially in the Caribbean.” 

Lidia Fromm Cea, executive director of the Mesoamerica Project for Integration and Development: “It is evident that humanitarian costs are escalating by the hour while experts warn about the war’s impact on global food insecurity. First, Ukraine produces 16 percent of the corn in the world, and Russia and Ukraine are collectively responsible for 29 percent of the wheat that goes to world markets: global effects may still not be completely foreseen, but it is easy to prove that skyrocketing gas and oil prices are causing food prices to increase everywhere. Latin America is no exception. Since 2020, Covid-19 has caused permanent supply-chain disruptions. Latin America, which is still reeling from the health and economic crises of the pandemic, as well as rising shipping costs and job losses, is now facing shortages and high food prices that are greatly affecting the poorest and most vulnerable families. Conflict and hunger are unfortunately intertwined. Considering that the World Food Program had warned that 2022 would be a year of catastrophic hunger, external shocks such as climate change and the fallouts of war make ending hunger by 2030 and achieving the second U.N. Sustainable Development Goal even more difficult now for the region’s Covid-19 stricken economies. The situation is even more bleak for island states that are largely dependent on imported food. We hope that a solution is found soon.” 

Shunko Rojas, managing partner at Quipu and former undersecretary of international trade at the Argentine Ministry of Production: “Russia’s invasion of Ukraine is having a tremendous impact on Latin America and the Caribbean. The region was in a very vulnerable position even before the war. After good performance in the 2000s, which included a sharp decline in poverty from 45 percent to 30 percent, the region has experienced an increase in poverty amid economic stagnation since 2015. The trend was badly exacerbated by Covid-19 which revealed some of the region’s structural deficits, including low productivity, high informality, poor infrastructure and weak institutions, and it resulted in more poverty, higher inflation and higher indebtedness. Furthermore, the war in Ukraine is fueling global inflation. Rising energy and commodity prices are posing a serious food security risk that might lead to social unrest and instability in the region. In the short run, Latin American and Caribbean governments should address food security through measures including VAT exemptions, tariff reductions and special trade facilitation measures such as those applied during the pandemic for critical inputs. Taking a medium and long-term perspective, we may well be at the doorstep of a new commodity super-cycle. Governments urgently need to invest in rural infrastructure, technology and human capital to build resilient and sustainable food production systems to benefit from a new era of commodity-intense growth and achieve the zero-hunger target by 2030.” 


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