An Alternative to the Grain Crisis in the Breadbasket of Europe

As Russian troops attack the sovereign nation of Ukraine, the world is witnessing not only a humanitarian crisis, but the corrosion of global supply chains. Most notably, the Ukrainian grain industry has suffered significant losses. As of April 11, Ukraine had lost at least $1.5 billion in grain exports since the beginning of the war in February. These losses indicate a dangerously high reduction of the global grain supply, threatening dozens of industries. The production of wheat directly affects the production of cereal, pasta, bread, cookies and other products that provide food to millions of citizens around the world.

In addition to its massive grain market, Ukraine has become one of the U.N. World Food Program’s largest supplier of products such as sunflower oil and wheat throughout the past 10 years. The WFP acts as a donor of food and essential services to millions of individuals around the globe. However, these vital agricultural products are not reaching their intended destinations; according to a UNWFP report, 13.5 million tons of wheat and 16 million tons of maize are currently frozen in Russia and Ukraine. Without these critical resources, which the Ukrainian government had guaranteed for years, millions more could face hunger, adding to the current starvation crisis.

Starvation, however, is not the only consequence of this reprehensible invasion. The massive spike in global grain prices has created unintended consequences around the globe. As explained by the Economist’s Intelligence Unit, Egypt will be severely impacted by the war in Ukraine. The Nile-dominating country is the world’s largest importer of wheat, bringing 12 to 13 million tons every year to feed its 105 million citizens. This reality makes countries like Egypt highly vulnerable to price spikes: on April 15, the price of wheat reached its highest peak in decades at $10.96 per bushel. This considerable price, added to the constantly increasing costs of oil (now at a high of $102  per barrel), makes the importation of wheat and other grains incredibly expensive.

Bread is considered a basic necessity in Egypt, essential for everyday life. This demand is why the national government subsidizes its sales price to ensure all Egyptians have access to it. These subsidies are imperative for the national government for historical reasons. The 1977, a 50% price spike of bread in the country led to political instability and hundreds of thousands of civilians taking to the streets for weeks, eventually clashing with the military. The riots resulted in 70 people dead, 550 injured, and the reestablishment of the subsidies. This historical case emphasizes the importance of bread prices in nations in which it is a dietary staple. The reality, however, is that the Egyptian government’s financial cushion might not be enough to prevent costs from skyrocketing today. While bread price spikes in wealthier countries can be paid for by the consumers, the situation is severely aggravated, and there is a chance that political instability might unravel.

Egypt, however, is not alone in this fight. Higher food and energy prices in the Middle East and North Africa region (MENA) also spell starvation for Lebanon and Yemen. At the same time, complications are expected in East Africa, where imports meet 84% of wheat demand. If not alleviated quickly, the incoming hunger might lead to violent demonstrations, riots and an overall rise in instability in the region.

The United States has a responsibility to its allies. As Senator John McCain said in 2017, “Americans will stand by you,” when addressing our international partners. It is vital that our strategic partners and allies, like Egypt, count on U.S. support in crises. The United States not only has a duty to act but is also in a comfortable position to do so. The current supply chain crisis has taught the world to diversify its imports and never count on one source alone. Until the current grain crisis is resolved, a temporary replacement for flour bread could be cornbread. We must recognize, however, that the two are very different in nutritional value and taste, and that flour bread has a historical place in the development of dozens of regions around the world. Entire cultures are based on the presence of flour bread to conduct religious rituals or family gatherings. However, it is vital to prevent starvation and political uprisings in the MENA region for the time being.

As of April 2022, the United States had a corn surplus of 3 billion bushels corn, equating to 84 million tons of the product. To prevent food waste and support our international partners, the State Department and USAID should coordinate with private actors, companies and farms to acquire their excess corn. This corn would then be donated to demanding nations during bilateral negotiations in the context of USAID’s Food for Peace initiative. The U.S. Congress would be the body allocating the necessary resources to the program and negotiations, which is why it is vital to understand how this policy supports the American farmer.

Firstly, we must acknowledge the exhaustion and overwork that working on a farm can lead to. The fact that millions of bushels of corn – a product of intense and hard work – are thrown away every year makes the farmer’s creation to no purpose. Instead of letting this corn rot out, the government should put the farmer’s hard work to good use in a way that furthers American national security objectives. We must also note that the U.S. government would not be expropriating this corn, but instead, buying it from the holders of the surplus, giving more revenue to the corn farmers.

Secondly, unstable countries worldwide can be a breeding ground for transnational crime, violence and political extremism. They can also fall into populism hostile to U.S. interests, hampering our deployment of troops, trade routes or diplomatic efforts. Ultimately, these threats could reach the United States, interfering our national security interests. It is vital that Congress and the executive mobilize the government’s tools sooner rather than later to prevent that unfortunate idea into a reality.

When consulted on this idea, Professor David Bartlett, an expert in international business from the American University Kogod School of Business, wondered why the U.S. had not moved in this direction already. By pursuing this approach of foreign aid, the United States would prove to its allies that we can be counted on during times of trouble and uncertainty. Furthermore, this policy would save thousands of individuals worldwide from facing starvation and prevent governments from facing grave instability.

The painful Ukraine crisis has had unanticipated consequences for the entire globe, ranging from an economic recession to an increasing risk of starvation and international political instability. The threats facing the wheat and overall grain industry have global implications, and no country will remain unaffected, including the U.S. The United States is dutybound to its allies and to protecting its foreign policy interests, which in this case, is deeply connected to the stability of our international partners. The following months will determine the future of governments and entire industries, and the United States must lead the way forward.

DISCLAIMER: McCain Institute for International Leadership is a non-partisan “do-tank” that is part of Arizona State University. The views expressed in this blog are solely those of the author and do not represent an opinion of the McCain Institute.

Author
Eduardo Castellet Nogués
Publish Date
May 19, 2022
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