Image credits: Dave Goudreau
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News Article

Food Systems on the Verge of Collapse?

By Sofía Hanna | Fri, 05/27/2022 - 07:45

The global food systems collapse is rapidly becoming a reality. Russia’s blockade of Ukraine, the rise in inflation and the current disruption in the supply chain are only a few of the factors involved in the rise of prices and the lack of food security. Despite being a large producer of essential foods such as corn, Mexico is not exempt from the repercussions that are approaching with this crisis.

 

Currently, the four big commodity traders that dominate grains globally and are central to the modern agri-food system are Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus, collectively referred to as ABCD companies, according to an Oxfam research report. Much of the trade involving these companies passes through vulnerable chokepoints, such as the Turkish Straits, which are now obstructed by Russia’s invasion of Ukraine, the Suez and Panama canals and the Straits of Hormuz, Bab-el-Mandeb and Malacca, as reported by IEEE Xplore.

 

Demand for food is only increasing over time, putting pressure on producers to avoid global problems such as a health emergency, world hunger and lack of food security. If deliveries are interrupted, shelves can suddenly empty. As of right now, not only are trade routes an issue. Food prices, which are already 59 percent higher than in January, and waste add up to the crisis along with the probability of acute world hunger. 

 

According to the UN’s World Food Programme (WFP), both Russia and Ukraine account for about 30 percent and 20 percent of global wheat and maize exports, respectively. Although Mexico is largely self-sufficient in its food production, it will not be exhumed from the repercussions the rest of the world will be experiencing.

 

Currently, the country is facing a 7.68 percent annual inflation rate. This led president Andrés Manuel López Obrador to introduce a plan to fight Mexico’s skyrocketing inflation, which is affecting the cost of basic food products such as milk, rice and bread. These controls in prices are mainly achieved through subsidies to basic basket. However, in the long run, these subsidies will entail an alteration in the patterns of production and consumption. There are already small Mexican producers and vendors who have also warned that these actions are insufficient to generate a real impact on inflation. Instead, they will end up as price controls and that it will affect future production. 

 

The crisis threatens to get worse and politicians could make it worst due to rapid responses like subsidies, especially given the confidence with which they are being used. “It is a perfect humanitarian storm. I would say that since the Second World War, we have not seen a humanitarian situation as severe as the current one,” said Martin Frick, Director of the WFP’s global office. 

The data used in this article was sourced from:  
MBN, IEEE Xplore, Oxfam research, WFP
Photo by:   Dave Goudreau, Unsplash
Sofía Hanna Sofía Hanna Journalist and Industry Analyst