Rising global food prices and shortages of grain and fertilizer stemming from the war in Ukraine could create further economic turmoil, risk analysts said. In some countries, this could trigger unrest and test the resiliency of Western companies with overseas operations in the coming months, they added.
“Food insecurity is one of our [company’s] main topics and one of the things you really have to look out for—there’s no getting away from it,” said
Srdjan Todorovic,
the head of terrorism and hostile environment solutions at
Global Corporate & Specialty, part of Germany-based financial-services company Allianz SE. “This is absolutely a global problem.”
People can accept many kinds of scarcity, but problems obtaining food—in addition to causing hardship—have a capacity to drive rule breaking and upheaval, said
Nick Robson,
a London-based global leader of the credit specialties practice at Marsh, a subsidiary of insurance broker
Cos. Typically, it takes a host of factors in addition to food shortages to trigger civil unrest. Still, risk analysts say they are keeping a close eye on global food prices.
Food costs are higher now than in 2007 and 2008, when then-record prices led to protests and riots in 48 countries, according to a United Nations report.
Though food prices have dipped slightly from highs reached in the immediate aftermath of Russia’s invasion of Ukraine, they were still about 44% higher in July than in 2020, according to a food-price index compiled by the Food and Agriculture Organization of the United Nations.
“We’re seeing across the world a much higher potential exposure to civil unrest as people see their purchasing power falling quickly,” said
Jimena Blanco,
the head of the Americas research team for risk-intelligence company Verisk Maplecroft.
High fertilizer prices in particular have led to far-flung impacts. In Peru and Greece earlier this year, farmers took their trucks and tractors to urban centers to voice their aggravation. Sri Lankan protesters stormed the presidential palace and forced a change in administration, a move analysts have attributed in part to a ban on chemical fertilizers that shrank crop yields. The uprising in Sri Lanka was a conspicuous illustration of the volatile forces a disappointing harvest can unleash in short order.
At least 50 countries depend on Russia and Ukraine for 30% or more of their grain supplies, including many developing countries in North Africa and Asia, according to a report from Marsh. Turkey, for example, imported 78% of its wheat from Russia and Ukraine in 2020, while Brazil is the main market for Russian fertilizers, Marsh said.
Not all countries face the same risks from rising prices. Rich democracies with the resources to…
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