Reducing Food Inequality in the Face of Conflict and Climate Change
The food supply system depends on wheat, the most extensively cultivated grain in the world and a staple diet in many countries.1 Due to armed conflict, climate change, and drought, the wheat market is struggling. Wheat delivery and production have been hampered by these issues, which impact both growers and consumers globally.
The situation in Ukraine and poor weather are inhibiting wheat production and delivery. The fifth-largest exporter of wheat in the world is Ukraine, but the conflict has reduced both exports and production. Climate change, which causes droughts and floods, worsens the problem. Russia and the U.S., the top two wheat exporters in the world, are impacted by local conflict and climate change. These problems have caused instability in the global wheat market, resulting in price fluctuations and supply chain disruptions affecting international producers and consumers.
"The market is susceptible to supply shocks that could lead to food insecurity and higher prices because it depends on a limited number of wheat varieties and exports."
Wheat is the most traded crop, producing 750 million metric tons annually.2 The ethanol, feed, and food industries drive the demand for wheat, and most of the world's wheat is produced in North America, Europe, and Asia.
Wheat market concerns must be addressed to maintain global food supply networks and ensure access to food.3 The most widely grown grain in the world, wheat is crucial for maintaining global food security. Inequality must be reduced worldwide to reduce market risks for wheat. Wheat exportation on a large scale has reduced global inequality by delivering food to underdeveloped nations. Countries can import wheat from nations that produce surpluses because of efficient supply chains.
Global wheat output changed during the Green Revolution of the 1960s, which developed high-yielding wheat varieties, used irrigation and fertilizer, and embraced modern agricultural techniques to expand global harvests.4 This revolution increased the world's wheat production, improving food security in underdeveloped nations. Conflict and climate change endanger this progress as wheat prices climb.
Conflict, climate change, and drought have all harmed the wheat market. Due to these factors, less wheat is produced and traded, raising the risk of relying solely on five commercial wheat species for exports. The world's wheat markets can be more resilient and risk-free using sustainable production techniques, various sources, and international cooperation.
Wheat production and trade are both impacted by climate change. Warming temperatures and shifting precipitation patterns are causing a global decline in wheat production. According to the International Food Policy Research Institute, global wheat production will decline by 6% due to a two °C temperature increase. Wheat yields are falling as a result of an increase in diseases and pests brought on by climate change. Drought also has an impact on the trade and production of wheat.
Export decline 2013–2015; production and transport both disrupted. Exported 17 million tons of grain in 2018.
Wheat exported in 2018, down from 17.8 million tons in 2010. Represents 22% of world wheat exports.6
Share of global wheat exports. Wheat prices rose in 2012 due to drought, which limited wheat production. Yields have decreased due to drought and climate change.
Global commerce in wheat accounts for 25% of total production, and the U.S., Canada, and Russia are the top three countries for wheat exports.5 The top three nations importing wheat are Algeria, Egypt, and Indonesia.
Supply-chain disruptions like the COVID-19 epidemic could harm the wheat market.7 Countries stopped exporting during the outbreak and stockpiled wheat, increasing the grain price globally, demonstrating the need for international cooperation and source diversification to reduce the risks associated with the global wheat market.
Wheat exportation has, in the past, helped to reduce inequality by delivering food to underdeveloped nations.8 Worldwide wheat yields increased due to the Green Revolution's agricultural innovations.9 Global hunger and poverty decreased due to the broad adoption of these policies, which also increased food security.10
Armed wars and turmoil have hindered wheat production in Yemen and Syria, lowering supplies and raising prices. Other times, armed groups have stolen food aid and purposefully ruined wheat crops, creating severe food shortages. Climate change changes hamper the world's wheat production through changes in weather patterns, notably droughts and extreme weather events, which have led to several crop failures.11 Wheat is sensitive to fluctuations in temperature and precipitation, making it challenging for farmers to predict yields and manage risk.12
International collaboration helps governments control the risks associated with the wheat market.13 Source diversification serves as one example. Market volatility, price increases, and food insecurity can result from an overreliance on many countries that produce wheat. By diversifying their sources, nations can decrease the problems caused by the environment, conflict, and drought. Nations can exchange knowledge and build capacities through international collaboration. Countries can work together to improve irrigation, agriculture, and the control of pests and diseases, improving output and providing weather protection.
The Consultative Group on International Agricultural Research (CGIAR) and the International Maize and Wheat Improvement Center (CIMMYT) are two successful instances of international cooperation in agriculture.14 The non-profit organization CIMMYT increases maize and wheat yield in underdeveloped nations to guarantee global food security. The group develops new crop varieties, sustainable farming methods, and market-driven initiatives in collaboration with national agricultural research centers, international organizations, and private firms. CIMMYT has improved wheat yields and reduced poverty and hunger in developing nations through its work. The CGIAR strives to conduct high-quality research, increase ecological resilience, and end hunger.
Despite the potential benefits, there are several challenges to international cooperation in the wheat market. Political upheaval is a significant issue, especially in nations that grow wheat, meaning a decrease in wheat output, trade volumes, and market volatility may be brought on by political upheaval.15 The funding of agricultural research and development is another issue. In underdeveloped nations, funding for these programs is frequently relatively meager. Domestic subsidies and tariffs further hamper cooperation on the global wheat market.
The prisoner's dilemma is a classic scenario in game theory where two individuals are apprehended and, after being separated, given the option to either cooperate by remaining silent or defect by betraying the other. The dilemma illustrates why rational individuals may not cooperate, even though it would be in their mutual best interest to do so.
While multilateral trade liberalization would reduce food insecurity, the prevailing course of action among WTO members appears to be to defect, meaning they prioritize negotiations for bilateral free trade agreements (FTAs) instead of focusing on multilateral liberalization through the WTO negotiation process. This approach ultimately leads to a suboptimal outcome, as bilateral agreements may benefit individual members but result in trade diversion and a lack of fairness in trade relationships between countries.16
The MFN principle requires WTO members to extend equal treatment to all other members. However, it has been eroded by the proliferation of FTAs and customs unions among WTO members, with monitoring ineffective and no consequences for non-compliance.
Lewis proposes the use of open accession provisions as a potential solution to the issue of ineffective monitoring of FTAs and CUs. These clauses appear in a minority of FTAs and allow other members to accede to the agreement on terms to be negotiated and agreed to, providing an opportunity for broadening or multilateralizing regional arrangements.
The WTO has been working on agriculture negotiations to reduce or eliminate subsidies that distort trade and markets, eliminate opaque border measures, and abolish export subsidies. Food export restrictions have become a top priority in recent years, and many developing countries would like WTO members to agree on a new "special safeguard mechanism" that they could use to raise tariffs temporarily in the event of a sudden surge in import volumes or a fall in prices.
Source diversification is essential for risk management and resilience in the global wheat market. It may result in food insecurity and price instability to rely mostly on five wheat species farmed for commercial purposes and a limited number of wheat export sources.
Diversity in the wheat market reduces food insecurity and price volatility and improves resistance to conflict, climate change, and drought threats associated with dependence on a few suppliers.17 Countries become more stable and resilient to supply interruptions by minimizing reliance on a single provider. Diversification does, however, have drawbacks. Since various wheat cultivars require multiple climates, it can be difficult for some countries to diversify their sources. Wheat sources may also be limited by transportation and infrastructure.
Kazakhstan has diversified its wheat supply by focusing on premium wheat types well-liked in China and Europe. Kazakhstan has also invested in infrastructure and logistics to export wheat, ready to increase exports to China up to 1 million tons.
Brazil has traditionally purchased its grain from Argentina, but due to environmental concerns, it has expanded its list of suppliers to include the U.S., Canada, and Russia. Brazil has invested in R&D to boost wheat production domestically.
Nations can increase their wheat supplies by encouraging the creation of new wheat varieties adaptable to various environmental circumstances.18 Funding research and development initiatives and working internationally to share information and skills can achieve this. Another option is to invest money in infrastructure and logistics to make it easier for wheat to be exported from multiple sources, including providing money for ports, roads, and trains to transport grain from wheat-growing regions to markets. Governments can encourage diversification by lowering import taxes on wheat from particular nations or giving farmers who cultivate non-traditional wheat types financial assistance.
Sustainable production can reduce market risks for wheat on a global scale.19 Wheat is so widely used that controlling the dangers involved in its production, trading, and consumption is crucial. Sustainable agriculture techniques can help lower uses of pesticides and fertilizers, can slow climate change, and can encourage efficient irrigation, thus lowering water waste. Moreover, farmers may strengthen their resistance to market volatility, climate change, and the viability of the wheat market by utilizing sustainable production methods.
In conventional farming, chemical pesticides and fertilizers are used, which pollute the environment and water, wipes out biodiversity, and hasten climate change. These actions could result in water scarcity and soil erosion. Another complex topic in the production of wheat is GM crops. GM crops increase crop yields with less pesticide use and more insect resistance. Many governments have outlawed GM crops due to concerns about their long-term environmental and human health effects.
Governments can help fund research into agroforestry, crop rotation, and conservation tillage, and provide technical support to help farmers adopt sustainable methods. They may develop regulations and standards to lessen the pollution from fertilizers and pesticides, offer subsidies or tax breaks to farmers that practice sustainable agriculture, support non-GM seed research and development, and promote sustainable land use practices that safeguard biodiversity and natural resources.
The domestic wheat market includes significant domestic subsidies and taxes. Agriculture output is supported by domestic offerings, which are payments made by the government to farmers. These subsidies include direct financial aid, insurance discounts, and tax credits. Wheat imports, however, are subject to taxes. Tariffs defend neighborhood farmers by increasing the cost of imported wheat.
Domestic subsidies and tariffs affect the domestic wheat market.20 Wheat prices may decline globally due to the overproduction that domestic subsidies have caused, because nations with significant agricultural contributions produce more wheat than they need and then sell it on the global market, which lowers prices. Wheat importers profit from lower prices. Developing countries that rely on high pricing for exports may suffer. Tariffs have the opposite effect: they can increase homegrown wheat's price by increasing its import cost, and there may be a decline in the demand for grain globally.
International cooperation is needed to control domestic wheat tariffs and subsidies. It is possible to eliminate domestic taxes and assistance to improve market efficiency and price signals. Adding variety to the sources of wheat is another tactic; as wheat exports increase, domestic subsidies and taxes decrease. As a last resort, encouraging the development of sustainable wheat can assist in stabilizing the price of grain worldwide by reducing the effects of climate change and drought on wheat yields.
Subsidies and tariffs on the domestic wheat market can be reduced by diversifying the supply and encouraging sustainable production. International coordination and cooperation are needed to implement these projects.
Global injustice and adverse outcomes are caused by the domestic subsidies and tariffs that dominate the world wheat market.21 Farmers in industrialized countries receive subsidies to cultivate wheat at a lesser cost than farmers in developing countries, maintaining inequality and making it challenging for farmers in developing nations to compete globally.
Famine, conflict, and climate change threaten the world's wheat industry. These problems emphasize the risks of mainly relying on five wheat types grown for commercial purposes. A few wheat export sources underline the necessity of supplier variety and sustainable production. Wheat exportation on a large scale has reduced global inequality by delivering food to underdeveloped nations. Conflict and climate change endanger the yield improvements of the Green Revolution as wheat prices climb.
Governments should develop sustainable production practices, reduce domestic subsidies and tariffs, and diversify their sources. Countries should create policies that promote cooperation and penalize non-cooperation for preventing a "Prisoners' Dilemma" scenario in which governments prioritize their interests over the group's welfare.
This report advises more excellent research into the effects of drought, conflict, and climate change on the wheat market. Fields that merit more investigation include: the impact of climate change on the adaptability of different wheat types; the potential for alternative proteins to replace items made from wheat in developing nations; the capacity of scientific advances like genetic engineering and precision farming to boost yields; the way the wheat market has responded to trade agreements and rules; and the efficiency of current institutions and the potential for global cooperation in lowering risks and boosting wheat market resilience.
Famine, conflict, and climate change threaten the world's wheat industry. These problems jeopardize the ability of wheat exportation to contribute to global inequality reduction.
For policymakers, prioritizing international cooperation in wheat market risk management should be paramount. International collaboration is crucial to address conflict, climate change, and drought threats. Although significant global teamwork is required, it might not happen without the proper laws and incentives. Therefore, collaboration on the world wheat market must be encouraged by policymakers.
To lower output risks, wheat farmers must use sustainable agricultural methods. The effects of drought and climate change are lessened through sustainable wheat production. Promoting sustainable practices can reduce food inequality and enhance global food security.
Consumers of wheat need to understand the importance of source diversification. Dependence on five commercially cultivated wheat species and a restricted number of wheat export suppliers may increase price volatility and supply chain vulnerabilities. Therefore, consumers should encourage the diversification of the wheat market by consuming alternative wheat species and sources.
Wheat market risks must be controlled if inequality is to be decreased and food security is guaranteed worldwide. Managing the risks linked with the wheat market is necessary due to the Ukraine situation, harsh weather, and a lack of dependable export sources. Global cooperation, source variety, and sustainable production are required to reduce wheat market risks. Policymakers, farmers, and consumers must support and encourage these initiatives to maintain a robust and sustainable global wheat market.