ASIA’S FOOD CRISIS
Deadly combination of conflict, misgovernance and climate change threatens widespread hunger. By Dominic Faulder
‘At such a time, the farmers of India are coming forward to feed the world,” Indian Prime Minister Narendra Modi declared boldly on a visit to Berlin earlier this month. Sudhanshu Pandey, secretary of India’s Department of Food and Public Distribution, endorsed Modi’s confidence. “India has a comfortable food situation with an overall surplus availability of grains and stocks expected to be higher than the minimum requirement for the next one year,” he said.
Indian trade delegations were duly dispatched to nine countries “for exploring possibilities of boosting wheat exports from India”, the Indian Express reported.
But on Friday the 13th, Modi’s hubris imploded. India, the world’s second largest wheat-growing nation after China, announced that it was banning most wheat exports.
A chastened Pandey told reporters the following day that this was to protect India’s own food security and counter inflation. India’s expected wheat crop has also fallen short this year because of heavy rains early on, followed by a record-breaking heat wave.
India’s export ban is the latest in a domino chain of supply cuts around the world that arguably started after Russia invaded Ukraine in late February. Both countries are major grain and fertiliser exporters, cut off from foreign markets by war in the case of Ukraine and sanctions in the case of Russia. With the loss of these suppliers, the food industry in the rest of the world has begun to seize up, as major exporters such as India (wheat) and Indonesia (palm oil) fear for domestic supplies.
Ukraine, the breadbasket of the world, fed an estimated 400 million people in 2021, with the bulk of its exports passing through the Black Sea ports of Mariupol and Odesa. The country can now export only by torturous land routes due to Russian attacks on the ports.
“Ninety million tonnes of agricultural produce, which Ukraine planned to export to countries in Asia, Africa and Europe, have been blocked,” Ukrainian Prime Minister Denys Shmyhal said recently.
Russia, meanwhile, is projected to harvest 130 million tonnes of grain this year, including 87 million tonnes of wheat — close to its 2017 record of 135.5 million. However, many countries have stopped doing business with Russia, or cannot because of financial sanctions.
Egypt and North Africa will be badly affected by the loss of Ukrainian imports, but the effects reach far beyond the immediate neighbourhood. In Asia, Indonesia is Ukraine’s second largest export market for wheat, where it is used in noodles, bread and flour. Russia, meanwhile, is Indonesia’s fourth largest source of chemical fertiliser.
“It is not Russia who causes trouble to the world economy, it is the sanctions against Russia,” declared Lyudmila Vorobieva, Russia’s ambassador to Indonesia. “We will offer more wheat to Indonesia if that is the choice of the Indonesian government.”
Ukraine also supplies around half of the world’s sunflower oil, and Russia around 20%. The price of sunflower oil has at least doubled in most of Asia this year and risen by 1,000% in parts of Europe. Cooking oils have already been rationed in European supermarkets, and are in very short supply elsewhere, particularly in South Asia. There have been knock-on effects in Asia as shortages beget further shortages, leading to record food prices.
Indonesia, which supplied 55% of the world’s palm oil to 134 countries in 2020, on April 28 slapped a ban on palm oil exports after the domestic price almost doubled to 25,000 rupiah (US$1.75) per litre, triggering protests.
The ban would have “outsize implications beyond palm oil and the country’s shores”, Moody’s Analytics said after the announcement. “This will translate into higher food inflation and jeopardise food security, especially for lower- and middle-income countries that prefer the cheaper palm cooking oil.”
President Joko Widodo last week announced that the ban would be lifted, effective from today, as long as domestic supplies can be provided at “affordable prices”.
India is the world’s largest importer of palm oil and there were fears that it would struggle badly if critical Indonesian supplies remained unavailable for too long.
Dipa Sinha, an assistant professor of economics at Dr BR Ambedkar University in New Delhi, finds it ”ironic” that India — a food-surplus nation with record wheat harvests for the past two years — should still have real food insecurity concerns. “The problem is in the distribution,” Sinha told Nikkei. “Many people are not able to afford enough food.
“We keep saying we have food surplus because we have rice and wheat but that is not enough. We need at the very least pulses and oil.”
At present, India imports half its edible oil needs. Retail inflation surged to a 17-month high of 6.95% in March.
The war in Ukraine is exacerbating serious food inflation. The United Nations estimates global food prices have risen over 34% in the past year, in large part because of the pandemic. Humanitarian agencies are in despair.
“We buy 50% of all the grain we buy from Ukraine, which allows us to feed about 125 million people,” David Beasley, head of the World Food Programme (WFP), said in late April. “We’ve now got 45 million people in 38 countries that are knocking on famine’s door.”
According to the Food and Agriculture Organization (FAO), last year 418 million Asians went hungry. Unicef reported in 2018 that over two-thirds of the world’s children considered underweight for their height were in Asia. Even in middle-income Malaysia, 20% of children under 5 are considered malnourished.
According to Beasley, the WFP has recently suffered a $71-million jump in its monthly costs and has had to halve food distribution to 8 million starving people in Yemen, Chad, Niger and Mali. This comes with East Africa facing its worst drought in four decades.
“WFP is forced to play this very cruel game of reducing the food available to the very worst off,” Paul Risley, a former WFP spokesperson for Asia, told Nikkei Asia. “We pit the very poorest places against one another for a very limited amount of food.”
Humanitarian concerns aside, Beasley’s most compelling argument for providing food relief to insecure people in their homes is that it costs a fraction of the amount that must be spent coping with the displacement and migration that follows starvation. Basically, pay a little now, save a lot later.
“What breaks your heart is there’s $430 trillion worth of wealth around the world today,” he said. “There’s no reason a single child should be dying from hunger, much less going to bed hungry.”
REGION-WIDE HUNGER
Yet the WFP is still needed in half of the relatively prosperous and fertile Asean countries — Cambodia, Indonesia, Laos, Myanmar and the Philippines. Often overlooked, tiny East Timor has a population of 1.3 million that is 36% “chronically food insecure”, according to the WFP.
The Philippines remains a net food importer with a population of 110 million, of which 64% are chronically food insecure due to the country’s vulnerability to natural disasters, poor handling of the pandemic and conflict. During the 2007-08 global food crisis, it was particularly hard hit because the economy was so lopsided toward sugar production instead of rice.
Even before the invasion of Ukraine, there were serious food shortages in Afghanistan and Myanmar that still have the potential to be highly disruptive, leading to displaced people and refugee exoduses. According to the WFP, 22.8 million Afghans face acute food insecurity, with 8.7 million now facing emergency conditions.
North Korea, meanwhile, will have an estimated shortfall of 860,000 tonnes of food this year. The country actually experienced famine in the mid-1990s, caused by the loss of Soviet support, economic mismanagement and climatic factors.
In Sri Lanka, too, epic economic mismanagement has compounded the mortal economic blow delivered to the vital tourist industry by Covid-19.
Even in the country’s north-central rice bowl, farming families are having to make do with two meals a day. “We are farmers, rice growers, and this is our current situation,” Herath Banda, 38, a paddy farmer and father of two, told Nikkei. “We only eat breakfast and dinner now.”
This politically inflicted disaster has eliminated Sri Lanka’s food reserves. It was precipitated by the hawkish President Gotabaya Rajapaksa, who in April 2021 banned chemical fertilisers in favour of organic alternatives — a move influenced by close allies who included a Buddhist monk and a medical trade union leader.
Buddhi Marambe, a professor of crop science at the University of Peradeniya in central Sri Lanka, estimates there was a 45% shortfall in produce during the main cultivation season that follows the start of the monsoon in October, mainly because of a lack of fertiliser.
The government ignored scientific studies, including a survey showing that close to 75% of farmers were heavy users of chemical fertiliser and only 10% cultivated without them. Rajapaksa reversed the policy later in the year, but the damage was already done, and the bankrupt country — with only $5 million left in foreign reserves as of mid-May — can no longer afford chemical imports. Hard-won self-sufficiency in rice has now been lost.
“Since 2008, Sri Lanka has been producing much more rice than we can consume — some years 20% more — so there was a sense of food security and stability,” Marambe told Nikkei. “We are now forced to import rice due to a human-induced decision.”
Rice has doubled in price this year while prices of everything from tomatoes to turmeric continues to spike.
AVOIDABLE MISERY
Food aid to some of Asia’s hardest-hit regions has also been held hostage to geopolitics. In October, India announced a donation of 50,000 tonnes of wheat to Afghanistan that needed to be transported across Pakistan, its arch-enemy.
In the current diplomatic standoff, Pakistan allows only Afghan exports into India but not two-way trade. Then-Prime Minister Imran Khan said an exception could be made in this instance, but the red tape was not cleared until late February, when 41 trucks from Afghanistan were allowed across to begin collecting the donated grain at the Indian border.
Myanmar was once the so-called rice basket of Asia. It is now subject to feckless military rule that has created an entrenched civil disobedience movement and stoked ethnic conflict on over a dozen fronts. Rice prices have risen only 14% in the past year, according to the WFP, even though production has dropped in the central Sagaing and Magway regions because of fighting and dry weather. Production in the Ayeyarwady Delta has been much less affected.
Myanmar in January exported* 260,000 tonnes of rice to Sri Lanka and China, among other places, but the figure had fallen to 130,000 tonnes by March, rice traders told Frontier, an independent Myanmar news organisation. The downward trajectory is likely to continue. The Central Bank of Myanmar introduced foreign-exchange controls on April 3, making domestic rice more expensive as the cost of imports rises.
But displacement and poverty may have played a part in keeping rice prices in check by disguising real demand. Myanmar’s military has been burning down villages, destroying a record 3,415 homes in April, according to Data for Myanmar, an independent monitoring organisation.
Agriculture has been severely affected, and the UN High Commissioner for Refugees reports that an additional 590,000 people have been internally displaced — bringing the total to around one million.
Scorched-earth tactics have created agricultural chaos and assure future food insecurity for Myanmar. A farmer who recently returned to his burned village in Sagaing despaired of recovering his livelihood growing sesame and pigeon peas. “In May and June, we have to prepare for planting,” he told Nikkei. “But this year, our seeds, fertilisers and other inputs have all been burned.”
“It is the triple threat of war, a government that is not responsive and actual climate change,” said Risley of the critical situation in central Myanmar.
THE LUCKY ONES
“Since 2008, Sri Lanka has been producing much more rice than we can consume. … We are now forced to import rice due to a humaninduced decision”
BUDDHI MARAMBE University of Peradeniya
China is one of 23 countries that have stepped up protectionism in the wake of the war in Ukraine, according to the US-based International Food Policy Research Institute. It ranks second to the US as an importer of food products and is the sixth-largest food exporter behind the US, Brazil, the Netherlands, Germany and France. Its overarching objective is to achieve self-sufficiency.
Last summer, Beijing curtailed fertiliser exports to protect food security, and this will be felt more keenly following the cutoffs from Ukraine and Russia. China and India were the world’s largest wheat producers in 2020, followed by Russia, with Ukraine in eighth place, but both were much less export-oriented.
Premier Li Keqiang acknowledged in March that the country’s agriculture faces “new challenges” because of the war in Ukraine and market volatility. In February, China’s official grain production target was set at a conservative 650 million tonnes — the same as in 2012.
Harsh Covid lockdowns in China have provided a dystopian glimpse of where food shortages could lead. Near riots broke out during six weeks of severe lockdown in Shanghai.
Social media carried footage of the unrest. In one, a drone floated past giant apartment blocks filled with howling people denied access to groceries. “Please comply with Covid restrictions,” a disembodied female voice exhorted from the blinking red light in the night sky. “Control your soul’s desire for freedom — do not open the window or sing.”
Compared to much of Asia, Thailand is a success story. It is the world’s 13th largest food exporter and third largest rice exporter, and sends roughly a quarter of its total food production abroad. It has doubled rice exports to China this year and broken into new markets such as Iraq, which imported 130,000 tonnes of rice in the first two months of 2022, compared to just 146 tonnes in 2021.
Thai food exports are forecast to rise by some 20% in value by the end of this year, following a 4.1% drop in 2020. The surge has gone a long way to closing the national income gap created by the collapse of tourism.
Thai rice prices are up about 10% this year with common grades fetching under $470 per tonne, and there is no sign of a shortage.
“Since we can produce rice all year round, we don’t have to invest massively to stock up in a large amount,” Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, told Nikkei. “We have plenty of rice to harvest every two to three months.”
Thailand is expected to produce between 30 million and 32 million tonnes of paddy this year — 20% more than in 2021. “With rising demand in several countries, we might revise this year’s export target up to 8 million tonnes from 7 million forecast earlier,” Chookiat said.
“We might experience shortfalls in some foods or raw materials that push prices up in general, but we’ve never suffered any food shortage,” said Visit Limlurcha, chairman of the Food Processing Industries Club of the Federation of Thai Industries.