By Brendan Vickers, Head, International Trade Policy Section; Salamat Ali, Economic Adviser & Trade Economist and Neil Balchin, Economic Adviser, Trade Policy Analysis, The Commonwealth Secretariat, London.
The number of severely food insecure people across the world is estimated to have doubled in the first two years of the COVID-19 pandemic to 276 million. This number is expected to reach 323 million in 2022 due to the war in Ukraine. Least developed countries (LDCs) are particularly exposed to this crisis within a crisis: data from the Food and Agriculture Organization indicates more than 251 million people in LDCs are severely food insecure.
What makes LDCs particularly vulnerable to food insecurity?
Three key factors explain why LDCs are so vulnerable to food insecurity.
First, they are unable to meet their food demand domestically and are highly dependent on international trade to secure access to food items. The share of food in LDCs’ merchandise imports is almost double the world average, while the share of cereals in their food imports is almost three times greater (Figure 1). Food items account for more than one-third of total merchandise imports in Afghanistan, Benin, Haiti, Eritrea, Guinea-Bissau, Sao Tome and Principe and Yemen, and more than 50% in Somalia.
Figure 1: LDCs’ food import dependency
Source: Commonwealth Secretariat (calculated using WITS data)
All 46 LDCs are classified as net food importing developing countries by the World Trade Organization (WTO). The COVID-19 pandemic and current geo-political tensions have exposed the vulnerability this status implies:
- Lockdowns and restrictions directly impacted agri-food supply chains across the world, compromising access to agricultural inputs, disrupting food production, blocking transport routes and distribution services, and distorting trade in food products. Moreover, food export restrictions implemented in response to COVID-19 and during the war in Ukraine have exacerbated the situation — 52 countries as of mid-May 2022 have responded by restricting exports of certain foods, further shackling cross-border trade in basic food items.
- Falling commodity prices at the start of the pandemic alongside lost tax revenues, foreign exchange earnings and remittances restricted the ability of some countries — especially the most fiscally constrained LDCs — to finance imports of food as well as productivity-enhancing inputs to support domestic production.
- Large-scale job losses and the adverse impact on incomes and livelihoods amplified the risks of food insecurity, especially for low-income households and those operating in the informal sector.
Second, the war in Ukraine has intensified trade challenges; LDCs’ reliance on Russia and Ukraine for food imports is much higher than the world average (Figure 2).
- Russia (15%) and Ukraine (9.8%) collectively supply one quarter of the world’s wheat exports, but overall half of the collective wheat imports of LDCs are sourced from either Russia or Ukraine (panel A in Figure 2).
- Commonwealth LDCs in South Asia and sub-Saharan Africa as well as those in the Middle East and North Africa, are especially dependant on wheat imported from these two countries. Some LDCs (Benin, Eritrea and Madagascar) source virtually all their wheat imports from Russia.
- LDCs also rely heavily on imports of edible oils, a key source of dietary fats, from Russia and Ukraine. These two countries account for one-quarter of all sunflower oil imports across the 46 LDCs, and as much as three-quarters in LDCs in South Asia (panel B in Figure 2). They are also important sources of sunflower oil imported by LDCs in Sub-Saharan Africa, East Asia and the Pacific.
Figure 2: LDCs’ wheat and sunflower oil import dependency on Russia and Ukraine, by region
Source: Commonwealth Secretariat (calculated using WITS data)
Third, the disruption to trade created by the war in Ukraine is affecting domestic agricultural production. Russia is a major exporter of fertiliser, a key input for agricultural production, supplying nearly 15% of global exports. Russia and Ukraine collectively supply over 7% of fertiliser imported across the 46 LDCs, and these shares are even higher for LDCs in Sub-Saharan Africa (nearly 9%) and South Asia (13%) as well as for Commonwealth LDCs (12%). Some LDCs have much higher levels of import dependence on Russia and Ukraine for fertilisers, particularly Mauritania, Sierra Leone, Senegal and Mali (Figure 3). China’s extended ban on fertiliser exports has blocked a major alternative source of supply.
Figure 3: LDCs’ fertiliser import dependency on Russia and Ukraine
Source: Commonwealth Secretariat (calculated using WITS data)
Three priorities to strengthen food security in LDCs
1. Keep trade open and remove distortions in international agricultural trade
It is critically important to promote fair and transparent market access and eliminate production- and trade-distorting domestic support policies in the agriculture sector, through action-oriented reforms, commitments and negotiated outcomes at the multilateral level. At the same time, countries should avoid implementing unnecessary export restrictions on food items.
Encouragingly, the ‘Geneva Package’ agreed at the WTO’s Twelfth Ministerial Conference in June 2022 acknowledges the importance of avoiding WTO-inconsistent export prohibitions or restrictions on agri-food trade. It also includes an agreement to not impose export bans or restrictions on foodstuffs purchased for non-commercial humanitarian purposes by the World Food Programme. Moreover, WTO members have resolved to ensure that any emergency measures addressing food security concerns minimise trade distortions and are implemented on a temporary basis and in a targeted and transparent manner.
It will be important to hold firm on these commitments, particularly considering the possible impact of restricting food exports to LDCs and net food-importing countries. Work also needs to be accelerated to address non-tariff barriers affecting trade in agricultural products. African LDCs have an opportunity, through the African Continental Free Trade Area (AfCFTA), to push for the removal of non-tariff barriers and other restrictions hindering the development of regional agri-food value chains.
2. Find an enduring solution to public stockholding
Current global dynamics have intensified the need for a permanent solution at the WTO to the issue of public stockholding for food security purposes. Implementing the decision at the WTO’s Bali Ministerial Conference in 2013 to exempt public stockholding programmes from legal challenge and the swift implementation of food security related decisions of the ‘Geneva Package’ offer a potential way forward, if introduced alongside some technical modifications. So does availing surplus food stocks on international markets in a non-trade distorting manner consistent with WTO rules. In any event, exempting LDCs from compliance with public stockholding requirements would be a relatively uncontroversial measure.
3. Build capacity and resilience in domestic food production
Smallholder farmers and other agricultural producers in LDCs would benefit from risk management support and improved market access for their products. They also need assistance to harness digital technologies to boost agricultural productivity and yields and improve the long-term sustainability of food production. Such support should be implemented alongside moves to diversify LDCs’ sources of imported food. African LDCs, for example, can look to boost regional trade in food products and integrate into regional food value chains through effective implementation of the AfCFTA.