Head of the FAO bureau - RBC: "There is no grain from either Ukraine or Russia on the world market"

Oleg Kobyakov, HEAD of the FAO Moscow office, in an interview with RBC spoke about the causes and features of the food crisis,on the importance of the EXPORT of Ukrainian grain and the overall impact of military conflicts on the situation with hunger in the world Oleg Kobyakov

“The consequences will be felt for quite a long time”

- Now representatives of different countries are declaring an impending food crisis. Is the situation really critical?

- Leo Tolstoy begins the novel "Anna Karenina" with the phrase: "All happy families are alike, each unhappy family is unhappy in its own way." Similarly, the situation in countries affected by crises is unique in its own way, although the general features of the food crisis have not changed significantly in recent years. One can hardly speak of a "looming food crisis" because the planet has been in crisis for a long time. In 2015, when the UN set the goal of ending hunger and ensuring food security by 2030, some 670 million people were hungry in the world. The pandemic has set us back significantly. According to FAO statistics, 828 million people in the world experienced chronic hunger in 2021. This is 46 million more than a year earlier and 150 million more than in 2019. If this trend continues,

In addition to chronic hunger, some 2.3 billion people in the world, or over 29% of the population, have experienced moderate or severe food insecurity at various times over the past year. This figure is 350 million more than in 2019, before the start of the pandemic. Of that number, 924 million people, more than 11% of the world's population, or one in nine, are severely food insecure—an increase of 207 million from two years earlier.

What is FAO

The Food and Agriculture Organization of the United Nations (FAO) is a specialized unit within the organization established in 1945 that coordinates international efforts to combat hunger. The goal is to ensure food security and guarantee regular access to high-quality food for the entire population of the Earth. FAO has 195 members (194 countries and the European Union) and operates in more than 130 countries around the world.

Does this crisis have its own characteristics?

“The peculiarity of the current food crisis is that the gender gap in food insecurity is growing. In the world, 32% of women and 27% of men are hungry. The gap is 5%, in 2020 it was 3%. Women bear the brunt of increased hunger and malnutrition.

Finally, the third illustrative figure concerns the healthy diet that we strive for and which is advertised in all glossy magazines and culinary shows - the perfect balance of proteins, fats and carbohydrates, vitamins and micronutrients, as well as dietary fiber and at least 450 g of fruits and vegetables per day. person per day. Such food is not economically affordable for 3.1 billion people, or 40% of the world's population.

Read on RBC Pro Pro x The Economist What awaits semiconductor manufacturers after the hype in the market ArticlesPro Living to 120: Why PAYPAL Co-Founder Takes Growth Hormone Pro Articles Tax Controversy:what to pay attention to right nowParallel Import of Technology: What's Wronghow Bill Gates rests Articles Pro How to overcome forgetfulness:Five tips for a good memory

Overall, the number of countries in dire need of external food assistance is close to 50. FAO updates this list several times a year. According to the latest published quarterly review, these are 46 countries, including 33 in Africa, ten in Asia, two in Latin America and one in Europe. Compared to the previous review, Sri Lanka and Ukraine have been added.

How long can the crisis last?

- Like every crisis, the food crisis has its own inertia, given by the cyclical nature of agricultural production. As a rule, in most producing countries, the crop is harvested only once a year. The production cycle in animal husbandry can also range from 45 days in poultry farming to five years in cattle if the livestock is restored from scratch. Even if we assume that emergency measures will be taken, then due to a certain inertia, cyclicality and the fact that it is impossible to stop all armed conflicts, put up barriers to droughts, floods and tsunamis, this situation will not be quickly resolved. Therefore, the drivers of the crisis and its consequences will be felt for quite a long time.

Photo: Farah Abdi Warsameh / AP

“Up to 20% of sown areas in Ukraine will not be harvested”

- If we talk about the drivers of the crisis, what role would you assign to pandemics, and what role to military operations in Ukraine? After all, from that moment on, the problem of hunger began to be widely discussed.

- This is a question that is now being asked by many analysts and even more often by politicians. In the statements that are heard from countries located on opposite sides of the "food barricades", one can hear various reasons. But FAO has been saying for years that there are three main causes of hunger and food insecurity. The first and foremost is armed conflicts. The second group is the negative consequences of climate change, that is, those very natural disasters and pest invasions. And the third is economic shocks that arise, on the one hand, from negative dynamics in related areas of production, for example, in energy markets and financial markets, as well as due to skillful or not very skillful attempts by governments to resolve crises in production and consumption.

It is difficult to single out a component of the Ukrainian conflict in the growing number of hungry people. According to the FAO, in the first three months of hostilities in this country, the number of hungry people in the world could increase by 3 million, but these numbers are very relative. In May of this year, FAO and its partners published a report on the geography of food crises in the world. This document provides a “weight distribution” of hunger factors. Thus, in 2021, as a result of armed conflicts in the territory of 24 countries, 139 million people were in the zone of acute hunger. Compared to 2020, an increase of 40 million, then the conflicts covered 23 countries. The report highlights Ethiopia, South Sudan and Yemen, where years of armed conflict have been going on and the number of hungry is measured in tens of millions.

In terms of economic shocks, they were the main causes of hunger in 21 countries in 2021. The number of hungry due to economic shocks amounted to 30 million people.

Extreme climate events have caused 23.5 million people to go hungry, primarily in eight African countries.

So, 139 million are conflicts, 30 million are the economy and 24 million are accounted for by extreme natural events. This ratio has been maintained in recent years. True, sometimes the weather overtakes the economy, as it was the year before last.

Let's go back to Ukraine. This country is in the top 5 exporters of grains, primarily corn. Now, perhaps, we still do not feel the consequences of military actions so strongly, because they will not appear immediately. Does FAO have any forecasts on this?

- The sowing season in Ukraine has long ended, the harvest is already underway. According to our forecast, this season the total wheat harvest in the EU countries will be 133 million tons, which is 4% less than in 2021. The forecast for European countries, the CIS, including Ukraine, is 190 million tons, which is 6% lower than the five-year average annual figures. This expected reduction is explained by the reduction in corn production precisely in connection with the military operations in Ukraine. Overall, the subregion's harvest will be 109 million tons, as the shortfall in Ukraine will be offset by a projected increase in yields in RUSSIA.

Specifically about Ukraine. For wheat for the current year, FAO predicts a harvest of 20 million tons, which is 27% below the five-year average. Our experts believe that up to 20% of the sown areas will simply not be harvested as a result of both the loss of the crop due to hostilities, and due to limited access to fields, a shortage of labor and a lack of economic resources (primarily fuel). As for corn, its harvest is forecast to be 24 million tons, which is 30% below the annual average. As a result, the total 2022 harvest, including winter crops, is expected to be in the region of 51 Mt, much less than the average annual cycle. There will be a shortage of 20-30%, which coincides with the figures given by the Ministry of Agrarian Policy and Food of Ukraine.

If we talk about the Russian harvest, then 128 million tons are expected here in total. For cereals, this is 6% higher than the average annual figure for five years.

“There is a problem of access of Russian grain to the world food market”

- How will the decline in crops affect the situation in the world?

- If we talk about the dependence of world grain importers on exports from Ukraine and Russia, then in total Black Sea grain is imported by 55 countries. Of these, 36 countries covered more than 10% of their total needs through these supplies. According to the Ministry of Agrarian Policy and Food of Ukraine, cited by FAO, the export of Ukrainian grain averages 6 million tons per month. In 2022, only 322 thousand tons were exported in March, 970 thousand tons in April, 1.2 million in May, and more than 1 million in June. The total capacity of Ukrainian storage facilities was 75 million tons. According to Kyiv statistics, out of 75 million, only 61 million tons of tanks are now available for storage. As of June 2, 14 million hectares were sown on spring crops in Ukraine, which is 20% less than last year. In 20% of enterprises engaged in the production of crop products, there are no plant protection products. There is a fuel crisis. In general, due to hostilities, due to the general price dynamics in the Ukrainian domestic market, prices for seeds, plant protection products, fertilizers and fuel increased by 40-45%.

Photo: REUTERS

- When will the importing countries start having problems because of this?

- In general, the world harvest is expected to be at the level of last year. Taking into account the capacity of storage facilities, reserves accumulated in a number of countries of the world, this food will be enough to meet the needs of importing countries. At the same time, there is really an acute problem of exporting Ukrainian grain from ports. About 5 million tons remain there now. The UN is actively working with both Moscow and Kyiv to solve this problem. That grain has, in fact, already been bought, the consumer is waiting for it. A significant part of this grain goes to the needs of international humanitarian operations. For example, the World Food Program actively purchases Ukrainian grain.

But this problem is in the final stage of solution. Now the world media have fallen silent on this topic, and this is evidence that the negotiations are going quite successfully and are close to completion. Their successful ending is a matter of politics and political will. Of course, the falling volumes will be replaced by the volumes of other manufacturers. The problem is that the price of wheat will rise.

In addition to the export of Ukrainian grain, which, by the way, is now quite actively exported through land channels, there is the problem of access to the world food market and Russian grain, because although formally food exports from Russia are not subject to sanctions, but financial sanctionsand direct bans, for example, on the entry of Russian ships into European ports, on the charter of ships for Russian operators, insurance of such ships, and finally, the difficulty of making payments, in fact, equated this situation with sanctions. Russia's largest agricultural bank, Rosselkhozbank, is under sanctions and cut off from SWIFT. Sberbank, whose share of the agricultural sector in the portfolio reaches 25%, is also completely cut off from global financial transactions. Therefore, the UN and FAO call for solving this problem in a comprehensive manner and ensuring unhindered access to world markets for both Ukrainian and Russian food.

There is one factor - fertilizers, one of the most important precursors of agricultural production. The most striking example of how much they are needed is the situation in Sri Lanka, where the country's leadership decided to grow organic products and abandoned fertilizers and plant protection products, and as a result did not get a harvest and put the country on the brink of a food disaster.

“The solution to the issue of the export of Ukrainian grain lies in the political plane”

— Returning to the grain stuck in Ukrainian ports. You said at the beginning of June that it is about 1% of the volume that is generally on the market. Then why such close attention to this issue?

— This is a low percentage compared to the total world volume of trade and production of cereals. But Ukrainian grain provides a very important share of domestic demand for many countries, such as Lebanon, Egypt, Somalia, Tunisia. Some of them import Russian and Ukrainian grain in equal proportions, while others import mostly Ukrainian grain. Now neither one nor the other grain hits the market. The unhindered provision of merchant shipping from the ports of both Ukraine and Russia is critically important for these countries. If you really do not have food, if you have always depended on one source, then the information that somewhere it is good and even there is an excess is disappointing for you. UN representatives take an active part in technical negotiations on unblocking Ukrainian ports, at which they agree on a detailed monitoring protocol for ships that will export grain. We expect that these negotiations will be successfully completed soon. But, again, I emphasize that the solution of the issue lies in the political plane.

— Now Russia is accusing the West of disrupting supply chains due to sanctions and problems with payments, and Western countries are talking about the impact of military actions in Ukraine on grain supplies. Is it possible to solve this situation in favor of end users?

“I think this situation will definitely be resolved. Probably, the world has already stopped asking the traditional question of the Russian intelligentsia “who is to blame?” and move on to finding the answer to the question “what to do?”. At present, something is already being done in this direction. For example, food supplies from Russia and the supply of fertilizers are formally exempted from sanctions, and the same United States is trying to develop a mechanism that would enable importers and exporters, participants in transactions to bypass the bans on financial transactions, on freight, and on insurance.

Let's be realistic. Of course, these are temporary measures and a radical solution to the issue is possible only after the cessation of hostilities, the achievement of a truce and a peaceful settlement. But these issues are in the focus of attention of the leading countries of the world and international associations, such as the G20, as well as the Russian leadership. Within the framework of the Eurasian Economic Union, joint measures are being taken both to protect the internal market of the Commonwealth and to ensure food exports.

- There is also an opinion that food prices are rising due to the acceleration of world inflation by Western countries and their policy of switching to green energy, which also increased the cost of fuel. Do you agree that this also contributed to the crisis?

“These issues are outside the mandate of FAO. Undoubtedly, the rise in energy and fuel prices has had a negative impact on food chains. Because, for example, for nitrogen fertilizers, the price of the final product is a derivative of the price of gas, and gas prices have skyrocketed. The rise in oil prices has consequently caused a sharp increase in the price of diesel fuel, which is used as the main motor fuel in agriculture. Then, let's take heating in greenhouses - this is again gas.

Photo: Eric Gaillard / Reuters

Therefore, here the objective and subjective factors that led to an increase in prices for fuel and fertilizer have a negative impact on production, on the producer and on the consumer. To what extent was this crisis provoked artificially? As far as I know, the international financial institutions have so far confirmed that the current crisis was provoked by the "warming up" of the printing press. In general, inflationary methods of crisis response, including by increasing the money supply, are not new. They have both negative and positive sides and have been used repeatedly over the past century.

The current crisis is multifactorial. And among its reasons are both objective and motivated by purely political considerations. The entire sanctions policy against Russia is purely politically motivated, this is quite obvious. We now have a huge negative pullback across the carbon agenda. With a return in some countries that have abandoned Russian gas to the production of electricity and heat generation by burning solid fossil fuels. Against this background, the sharply negative role of agriculture in the global greenhouse effect (a popular topic, by the way, among environmental activists) simply fades.

- According to the International Food Policy Research Institute, a significant role in the development of the food crisis is played by restrictions imposed by exporting countries due to the situation in Ukraine. For example, Indonesia has banned the export of palm oil, Argentina has banned the export of beef, and so on. The total number of countries that have announced restrictions has increased from three to 16. In your opinion, how does this factor affect the current situation, what is its role in the crisis?

— Both in my opinion and in the opinion of the FAO, this factor has an extremely negative impact on the food market. The global food chains are highly internationalized, and the food market has long been global. This is determined by the very specifics of the agricultural sector and the specialization of individual countries in the production of certain types of agricultural products. We are fundamentally against restrictions that distort the market and create barriers to trade flows, against unjustified preferences and protectionist measures. FAO is convinced that the share of restrictive measures should be kept to a minimum and can only be used in exceptional cases to protect the domestic market, when there is a high risk of vital products “escape” from it, at risk to the food security of their own population.

FAO and Russia

Russia joined FAO in 2006 and is assisting projects by making voluntary contributions. In 2020, Moscow contributed $10 million to an operation to combat the Desert Locust in East Africa. In total, over $250 million was allocated to it under the auspices of FAO, the outbreak was completely eliminated. In 2015, the FAO Moscow office was opened. In total, the organization has 130 offices, mostly technical assistance. Moscow is distinguished by the fact that it is one of the seven offices in the donor country, which is advanced in terms of the development of the agricultural sector. Oleg Kobyakov has been DIRECTOR of the FAO Liaison Office with the Russian Federation since February 2020. A career diplomat, worked for 35 years in the system of the Russian Ministry of Foreign Affairs - at the embassy in Prague, in permanent representations - at the European Union in Brussels, at UNESCO in Paris and at the FAO in Rome, as well as in the department of international organizations of the Russian Foreign Ministry and in the secretariat of the minister. From 2011-2016, he was Acting and then Deputy Permanent Representative of the Russian Federation to FAO and the Rome-based UN agencies.