DANIEL PEREIRA
…Growing Food Insecurity – wrought by faltering economic and food security, which is where we start with a few broad perspectives on food security in Europe and Central Asia.
Global Food Security, Polycrisis, and the OODA Almanac 2023
Global Food Insecurity and economic and food security operate in a climate of what we call multiple simultaneous crises – also known as polycrisis, defined as a cluster of interdependent global risks create a compounding effect, such that their overall impact exceeds the sum of their individual parts. (1)
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The issue of food insecurity also falls squarely under a few of the themes from the OODA Alamanac 2023: Time Juxtaposition: 2023 feels like we are living in yesterday and tomorrow simultaneously – with anachronistic images of food insecurity – which harken to a bygone era of global hunger and poverty – alongside images of extreme global wealth and prosperity.
The System is Broke: A shorthand for the dysfunction and decline of government, private sector, and cultural systems. Enough said – and people are going to not have adequate access to food as a result. There are many threats in the world today, but global food insecurity is going to make much of the world a horrible place to try to live.
The Binary Fracture: Individuals and institutions are presented with choosing between different polarities instead of being able to align along a median. The binary fracture that is the war in Ukraine has induced further food insecurity by way of the weaponization of the wheat crop from Ukraine, long considered the “Breadbasket of Europe.”
Globalization Transformed: with increased regionalization, including shorter more localized supply chains, in an effort at more national self-sufficiency, globalization will suffer from the same binary fracture tendencies we discussed earlier – which will create more frequent pockets of instability and increase economic, health, and food disparities.
Hanging over it all: Cyberconflict Escalation coupled with the emergence of The Code Era – “code that writes code and code that breaks code. Code that talks to us and code that talks for us. Code that predicts and code that decides. Code that rewrites us” – has us on the lookout for how the weaponization of the global IT supply chain is directed at the global food distribution system. It is not an “if,” but a “when”.
A 3X Increase in Mentions of Food Insecurity in the 2023 Annual Threat Assessment of the U.S. IC
The Annual Threat Assessment of the U.S. Intelligence Community is an unclassified report released each year concurrent with Congressional testimony to Congress by the Director of National Intelligence. The report focuses on what the ODNI believes are the most direct, serious threats to the U.S. during the next year. OODA leverages the details of this report in our research and reporting. Every year we use this as a foundation for updates on our threat assessments and our C-Suite report. We read the report looking for surprises or changes to assessments that need to be immediately highlighted to business leaders.
The 2023 Annual Threat Assessment had a much stronger emphasis on the threat of food insecurity and food and economic security, notably: The term is mentioned 3X more than the 2022 threat assessment (7 references in 2022; 22 in 2023).
Food insecurity was called out as a driving factor contributing to instability in just about every region of the world.
The war in Ukraine has resulted in both a decline in food exports and also degradation of fertilizer production.
Chinese overfishing is hitting Africa and Asian food supplies hard with 85% of global fish stocks fully exploited.
Shared global challenges, including climate change, and human and health security, are converging as the planet emerges from the COVID-19 pandemic and confronts economic issues spurred by both energy and food insecurity.
Rapidly emerging or evolving technologies continue to have the potential to disrupt traditional business and society with both positive and negative outcomes, while creating unprecedented vulnerabilities and attack surfaces, making it increasingly challenging to predict the impact of such challenges on the global landscape.
At the same time, as the nations of the world strive to recover from the COVID-19 pandemic, they are beset by an array of shared, global issues. The accelerating effects of climate change are placing more of the world’s population, particularly in low- and middle-income countries, under threat from extreme weather, food insecurity, and humanitarian disasters, fueling migration flows and increasing the risks of future pandemics as pathogens exploit the changing environment.
Russia’s aggression against Ukraine has aggravated COVID-19-related fragilities in the global economy, raised commodity prices, fueled market volatility, and contributed to food insecurity and financial instability, particularly in low-income countries. The multiplicity of reinforcing fragilities suggests that these trends will continue this year as governments struggle to insulate their populations from eroding living standards linked to inflation and low economic growth.
The combination of elevated energy and food prices has increased the number of individuals facing extreme poverty and food insecurity, particularly in low-income countries, and these countries will struggle to reverse these trends through 2023, even if global food prices stabilize. High food prices predate Russia’s invasion of Ukraine and the resulting reductions in grain exports have reduced the purchasing power of millions of households and limited their ability to absorb new price hikes.
Russia and Ukraine are among the most important producers of agricultural commodities in the world. Both countries are net exporters of agricultural products and fertilizers to global markets, where exportable supplies often are concentrated in a handful of countries.
Before the war, more than 25 countries were dependent on Russia and Ukraine for more than 50 percent of their wheat imports.
Poor households globally spend more than 40 percent of their incomes on food, compared with about 10 percent in high-income countries, making these populations particularly vulnerable to persistently high food prices.
The Taliban regime will continue to prioritize the enforcement of theocratic rule and consolidating power over building a modern state, contributing to Afghanistan’s structural economic weaknesses and persistent humanitarian crisis. A majority of Afghans are suffering food insecurity because of the effects of conflict, drought, and natural disasters. Further economic deterioration could increase Afghans’ desire and attempts to migrate to neighboring countries. (2)
Strategic Grain Hoarding by China and a Looming Global Rice Shortage
These two OODA Loop New Briefs from the last 18-month period are related and tell an important story – we are just not sure about the details to start tying a research narrative together. We review the details here as a jumpstart to our deep-dive efforts
The News Brief above – China hoards over half the world’s grain, pushing up global prices – first surfaced in December of 2021. Once Russia invaded Ukraine, it took on a whole new strategic meaning. It then held on as one of our most trafficked, Top 10 News Briefs of 2022, which is notable in and of itself. We have had it set it aside for further investigation since early 2022, but nothing very specific has mapped to it or fleshed out a recognized pattern or string to pull.
So What?: A key point for risk management professionals is to maintain a broad awareness of strategic issues. Do not just focus on the topics making headlines. Grain stockpiles are not top-of-fold issues in the media, but – as this analysis indicates – it is clearly an issue of concern. It relates to food security globally and can impact just about every other category of risk. Why is this important to the CCP? Clearly, they fear a hungry population.
What’s Next: Expect continued stockpiling by China, and expect an even more aggressive stance on global fishing by China.
On April 20, 2023, CNBNC reported:Rice production for 2023 is set to log its largest shortfall in two decades, according to Fitch Solutions.
“At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices,” Fitch Solutions’ commodities analyst Charles Hart told CNBC.
There’s a strained supply of rice as a result of the ongoing war in Ukraine, as well as weather woes in rice-producing economies like China and Pakistan.
A global rice shortage is on the horizon, potentially the largest one in two decades. The shortage is primarily due to extreme weather conditions, including floods, droughts, and typhoons, as well as the ongoing war in Ukraine. Additionally, the COVID-19 pandemic has exacerbated the situation by disrupting supply chains, leading to decreased production, transportation delays, and labor shortages in the agricultural sector.
So What? Business leaders should be prepared for the implications of this rice shortage, including higher prices and potential supply chain disruptions.
What’s Next? To mitigate the impact, companies should consider diversifying their sources of rice, exploring alternative grains, and investing in technology to improve agricultural productivity.
Firms may also need to adjust their pricing strategies and communicate transparently with customers about the reasons behind price increases.
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