WEF warns of “multiple food crises to follow” as more price shocks look certain

12 Jan 2023 --- The World Economic Forum (WEF) predicts persistent polycrises of food, energy and fertilizer shortages during the next two years. A new report says starkly how food system failures are unavoidable and society can expect further food price spikes as the cost of living crisis continues.

The organization calls for bold leadership actions to embrace the complex situation holistically, bringing dual solutions that target both food security and climate change.

“We must face this crisis with the certainty of multiple food crises to follow,” underscores Tania Strauss, head of strategy and global projects for the WEF.

Sky-high volatile food inflation will be a topic of next week’s meeting of world leaders in Davos, Switzerland.

The WEF The Global Risks Report 2023 report has 116 mentions of the word “food,” in contrast to the seven references to “food” in the WEF 2022 report. This year’s document surveys more than 1,200 experts from the public and private sectors and considers the cost-of-living crisis” the most pressing global risk in the next two years.

Opportunities for food system transformation
Strauss notes that success rests on every country taking action and details the multiple levers that can collectively drive change across nations.

“Investing in healthy soils and innovation for decarbonizing food value-chains will create carbon sinks, improve nutrient density, reduce food losses, and boost jobs and livelihoods of farmers, especially 500 million smallholders, who are on the frontlines of this crisis,” explains Strauss.

WEF estimates global food consumption to increase 1.4% annually over the next decade, while production will only increase 1.1% per year.“But they need support to transition to climate-smart approaches through aligned incentives, radical policy measures, tailored risk models and credit services, supply chain procurement and market demand,” she continues.

Investing in country-led food system transformation pays off the investment risk and how applying some measures in an urgent manner works.

“Each “early mover” country shows how multiple actors and concurrent levers such as enterprise development, technology innovation ecosystems, blended financing, de-risking partnerships, across public, private and social sectors, interact and coordinate to enable large-scale transformation over time,” Strauss notes.

Global food supply crisis?
The WEF report warns of “the material possibility of a global food supply crisis occurring in 2023” due to the war in Ukraine, the lagged effect of price spikes in fertilizer and extreme weather conditions on food production in critical regions. 

“Predicted droughts and water shortages may cause a decline in harvests and livestock deaths across East Africa, North Africa and Southern Africa, exacerbating food insecurity,” explains the report. 

Some countries like Somalia are already experiencing catastrophic system failures as famine appears inevitable and half a million children face malnutrition, in a “pending nightmare not seen this century,” according to UNICEF spokesperson James Elder.

The report also flags simultaneous food and debt crises in Tunisia, Ghana, Pakistan, Lebanon and Egypt. The latter is seeing increasing instability due to currency debasing against a strong US dollar, making food imports prohibitively expensive in a country requiring massive food imports. 

Furthermore, Pakistan suffered a cataclysmic monsoon in its food-producing region of Sindh, with the WEF estimating 800,000 hectares of farmland being lost. 

Overoptimistic yield predictionsClimate change is also expected to exacerbate malnutrition as food insecurity grows.
In a highly interconnected world, production losses or controls imposed by producing countries could further destabilize global food security, according to the WEF. In 2022, food export bans caused considerable pain across nations and sent commodities like vegetable oils to historic all-time high prices.

WEF warns of possible “water shortages in the Netherlands and droughts and large-scale insect loss in the US and Brazil.”

Furthermore, climate change is also expected to exacerbate malnutrition as food insecurity grows.

“Crop yields have fallen in volume and nutritional value due to heat, changing weather patterns, dry and wet precipitation extremes, and shifts to the distribution of insects, pests and diseases,” details the report. 

The Intergovernmental Panel on Climate Change estimates that climate change has reduced agricultural productivity growth by 21% since 1961 and up to 34% in Africa and Latin America. 

Moreover, the remaining yields are less nutritious, as “increased levels of carbon dioxide in the atmosphere can result in nutrient deficiencies in plants, and even accelerated uptake of heavy minerals, which have been linked to cancer, diabetes, heart disease and impaired growth,” according to the report.

Some proposed solutions are gene editing of crops, enhancing the productivity of existing farmlands, dietary shifts and food waste and loss reduction. 

The severe commodity supply crisis was listed as a top-five concern by the WHO in 34 countries, including South Korea, Chile, Switzerland, Singapore and Turkey.

“The catastrophic effects of famine and loss of life can also have spillover effects further afield, as the risk of widespread violence grows and involuntary migration rises,” explains the report.

In 2022, food export bans caused considerable pain across nations and sent commodities like vegetable oils to historic all-time high prices.Food security vs. nature conservation
The WEF explains how the ongoing affordability and food availability crisis is at odds with the efforts to conserve and restore biodiversity. 

“Agriculture and animal farming alone take up more than 35% of Earth’s terrestrial surface and are the biggest direct drivers of wildlife decline globally,” notes the organization.

The body delves into how emerging countries will boost local production to rely on something other than expensive food imports, which will take a toll on ecosystem preservation.

A solution suggested by the WEF is the increase in the deployment of debt-for-nature swaps, where, for example, debt is written off in exchange for promises to invest in biodiversity preservation and climate initiatives. However, this is not a perfect solution, as “these mechanisms could contribute to shorter-term challenges of food insecurity, the rising cost of living and declining government revenue,” also according to the WEF.

“Technology will provide partial solutions in the countries that can afford it,” highlights the report.

“For example, the global vertical farming market has been predicted to grow at a compound annual rate of 26% and hit US$34 billion by 2033. These agricultural production techniques increase food output per unit area with a smaller water and biodiversity footprint, but can be more carbon-intensive and may have an indirect land footprint that exceeds open-field farming in some regions,” the report continues.

What is certain is that food production needs an urgent boost, as the WEF estimates global food consumption to increase 1.4% annually over the next decade, while production will only increase 1.1% per year. 

By Marc Cervera