The 2008 food crisis was not the result of a shortage in food supply. It was a by-product of the 2008 Global Financial Crisis that disrupted the world’s financial system as we know it, culminating in job loss, and thus income.
As food became inaccessible and unaffordable, countries subsidised food imports and restricted exports of food to secure it for domestic consumption. Consequently, food prices increased, with the magnitude of those increases depending on international market conditions for each commodity. That is, the price of the food commodity went higher as its traded volume, as a percentage of its total global production, went down.
To illustrate, the price of rice, the least traded food commodity compared to maize and wheat, increased the most during that period. According to Walden Bello in his 2009 account, ‘Food Wars’: “Rice exports were simply banned in Cambodia, Egypt, India, Indonesia, and Vietnam”, four of the top 10 exporters of rice in 2008.
Being a net importer of rice, Gulf Cooperation Council (GCC) countries would have had to grapple with food insecurity, not because they cannot pay for their food imports, but because countries were not willing to sell. However, and since the preferred rice variety in GCC countries is Basmati, exporting that specific variety provided a way around export restrictions, without causing domestic food shortages and food rioting among rice exporters.
A wake up call
Food importers, in the GCC and elsewhere, were alarmed by their dependency on food imports, which resulted in two main outcomes: one, a renewed strive towards self-sufficiency; and, two, a surge in agro-investments in food producing countries. The increase in food prices again in the 2010-2014 period further supported both narratives.
We may today be on the verge of another hike in food prices. Such a hike will not be the result of lower food production, but a disruption in global supply chains caused by the COVID-19 spread.
With COVID-19 being labelled a pandemic, the spread has encouraged countries to take protectionist measures that will safeguard medical equipment for their domestic use. Some of the introduced measures included partial or full restrictions on exports of medical equipment, so that governments can procure most of their needs from domestic sources.
This was done along with other measures that enabled limited or full lockdown of countries, such as the suspension of commercial flights. Altogether, such measures limited people and goods’ movement between countries, resulting in a mild spike in food prices.
The worry about shortages
As expected, those measures added to the disruption in global supply chains that was caused by the COVID-19 spread, stoking fears of shortages in different imported goods. While no country has introduced bans on food exports yet, the possibility is real as countries attempt to secure their food production for domestic consumption.
That, and any additional disruption in global supply chains, could hamper food security in food importing countries. The limited “food runs” that took place, both in food producing and food importing countries, could become more widespread, developing into food rioting in places and in famine-like situations in others.
After all, famines, in modern history and memory, occurred in situations and at times when ample food supply in one region could not be delivered to other regions that were in much need of food deliveries.
In conclusion, and just like the case was in 2008, future food shortages will not be instigated solely by disruption in global supply chains in connection with the COVID-19 spread. It will be elicited by restrictions and bans on food exports, if introduced by food producing countries.
Food runs could be the beginning of a much worse food crisis, at a time when the world is contending with an imploding health crisis and a financial meltdown.
The last thought that I want to leave you with: Will self-sufficiency extend into non-food sectors once the spread of COVID-19 abates?
- Abdulnasser Alshaali is a UAE based economist.