The wheat of the matter: Disruption of supply chains due to Ukraine war has implications for India’s food security

Source: The post is based on an article “The wheat of the matter: Disruption of supply chains due to Ukraine war has implications for India’s food security” published in The Indian Express on 8^th September 2022.

Syllabus: GS 2 – Issues related to nutrition and hunger

News: The pandemic and Ukraine-Russia war has increased food insecurity worldwide and it is a matter of concern for India also.

How Ukraine and Russia war has impacted food security worldwide?

Russia and Ukraine accounts for 27 per cent of the world market for wheat, 16 per cent for corn, 23 per cent for barley, and 53 per cent for sunflower.

Before the war Ukraine exported about 95 per cent of grain.

Countries mainly in Africa West Asia and Asia depend on Russia and Ukraine for more than 50 per cent of their wheat imports.

What has caused rise in the food price around the world?

According to a report by International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) speculation on agricultural products on the future exchanges was one of the main reasons for the rise in food prices.

The arrival of large pension funds, hedge funds and investment banks in the agriculture markets has also been the reason of excessive speculation.

Future Market: The main purpose of futures markets was that farmers could transfer the price risk to sell the produce at the current price but deliver it in the future. It acted as a safeguard for famers due to uncertainty caused by weather failures, wars, etc. This future markets have been misused by the speculators and big financial companies.

Betting: The prices of markets do not vary with the demand supply problems but it varies due to speculation and big companies betting on the prices. This betting on the future markets leads to price volatility and endangers food security around the world.

What are the current food security issues with India?

Food inflation is a major cause for concern for food security in India.

The pandemic has reduced the income of the households which has been one of the reasons for rising hunger levels in India.

According to the Food and Agriculture Organization, the Food Price Index has increased by 30 per cent in the year 2021-22.

According to the Global Hunger Index, India ranks 101 among 116 countries.

According to the Hunger Watch Report, 45 per cent of the people reported running out of food in the month of January.

The situation is even more unpredictable now because of the rise in prices.

What can be done further?

India: The Indian government should regulate the private sectors and bring more transparency on food stocks. The restrictions should be set on the hoarding of the food stocks by the private sectors.

Internationally: A limit on the purchase can be set for the speculators but this requires a multilateral agreement.