Food Crisis Sparks Concerns Over Protectionism and Shortages

By Jessica DiNapoli and Dan Burns

DAVOS, Switzerland – A mounting global food crisis is driving countries to adopt protectionist policies that threaten to exacerbate the situation and potentially ignite a broader trade conflict, according to business leaders and policymakers at the World Economic Forum.

In an indication of the tightening grip on food supplies and soaring prices, a government source revealed that India might impose restrictions on sugar exports for the first time in six years to stave off a spike in domestic prices.

Additionally, Indonesia, the largest exporter of palm oil, has decided to eliminate a subsidy for bulk cooking oil and will instead implement a price ceiling on raw materials for local refiners.

“It’s a major issue, and frankly, I believe the challenges we face ahead are even greater than those we’ve already encountered,” stated Gita Gopinath, first deputy managing director of the International Monetary Fund, who highlighted growing concerns over food security.

The atmosphere of protectionism was palpable at Davos, where calls for immediate discussions surfaced to prevent a full-scale trade war. Jay Collins, vice chairman of banking, capital markets, and advisory at Citigroup, emphasized the importance of global leaders engaging in calm, constructive conversations regarding trade, food, and investment.

Collins noted that there have been multiple discussions with G7 representatives in the past couple of days.

In Sub-Saharan Africa, for example, 40% of household expenditure goes toward food, Gopinath pointed out. The rising prices have significantly affected the cost of living and led to increased hoarding by governments.

“More than 20 countries have implemented restrictions on food and fertilizer exports, which is only making the situation worse,” she remarked on Monday.

The crisis has deepened following Russia’s invasion of Ukraine, which has further disrupted an already tenuous food supply situation. David Beasley, Executive Director of the United Nations World Food Programme, noted that food costs and shipping rates were on the rise even before the conflict began.

The number of individuals facing starvation has surged from 80 million to 276 million in the last four to five years, Beasley shared in an interview at Davos. He warned that keeping ports closed during Ukraine’s harvest season in July and August would effectively be a “declaration of war” on global food supply.

Many companies at Davos have been reaching out to explore ways to combat the food crisis, Beasley mentioned.

Erik Fyrwald, CEO of Syngenta Group, argued that agriculture must play a crucial role in addressing climate change and improving food security. He highlighted the benefits of sustainable farming practices, such as reduced tillage and winter cover crops, which are designed to enhance soil health and food production.

Gilberto Tomazoni, CEO of the world’s largest meat processor, also spoke at a panel, pointing out that humanity faces two significant challenges simultaneously: combating climate change and increasing food production to feed a growing population. He stressed that current agricultural practices are unsustainable and called for urgent action to reduce food waste.