The 1st Session of the 2nd G20 Finance Ministers and Central Bank Governors’ (FMCBG) Meeting

The 1st Session of the 2nd G20 Finance Ministers and Central Bank Governors’ (FMCBG) Meeting

20th April

Speaking points of Dr. Qu Qu Dongyu

Director-General

Food and Agriculture Organization of the United Nations - FAO

 

Mr Chairman,

Excellences,

1. Thank you for inviting me to this meeting.

2. Secretary-General Guterres, on behalf of the UN family, repeatedly called for the war in Ukraine to stop.

3. Already prior to this crisis, international food prices reached an all-time high two years after the pandemic.

4. This was mostly due to market conditions, but also high prices of energy, fertilizers and all other agricultural inputs and services.

5. As the Russian Federation and Ukraine are important players in the global food market, accounting for nearly 30% of global wheat exports, 20% of maize exports and about 63% of sunflower oil exports, the war could seriously affect food security worldwide.

6. The Russian Federation is also a key exporter of fertilizers. In 2020, it ranked as the top exporter of nitrogen fertilizers, the second leading supplier of potassium, and the third largest exporter of phosphorous fertilizer.

7. In terms of trade networks, both countries are key suppliers of wheat to many countries in the world.

8. Nearly 50 countries depend on the Russian Federation and Ukraine for at least 30 percent of their wheat import needs. Of these, 26 countries source over 50 percent on their wheat imports from these two countries.

9. For fertilisers, 25 countries rely on the Russian Federation, with an import dependency of 30 percent or more for the N, P, and K fertilizer that will lead to a global decisive impact on all food production for 2023.

10. The war can have multiple implications for global markets and food security.

11. Wheat is a staple food for over 35 percent of the world's population, and the lack of a substitute is likely to compound the pressure on wheat prices during the current and the next year.

12. Thus, the crisis represents a challenge for food security for many countries, and especially for low-income food import dependent countries and vulnerable population groups.

13. In March, the FAO Food Price Index reached a new all-time high. In just one month with respect to February, cereals prices rose by 17.1% and vegetable oils prices by 23.2%.

14. Soaring prices for staple foodstuffs and fuel are hitting the most vulnerable.

15. Higher fertilizer prices today are putting at risk the future harvests globally.

16. This additional burden comes at a time when the costs of COVID-19 are already squeezing the budgets farmers and governments.

17. To assess the potential impact of the war, preliminary simulations were undertaken using FAO scientific model to estimate the impact on prices and undernourishment.

18. The moderate scenario assumed that export volumes of grains and oilseeds would be reduced mostly minus 10 mmt of Wheat and Maize,

19. to get a second marker, the simulations were repeated with a more severe shock , removing 25 mmt Wheat and Maize.

20. And these scenarios indicate an additional increase in the number of undernourished people ranging from 7.6 to 13.1 additional million people between 2022 and 2026, compared to the baseline.

21. To address the impacts of the war in Ukraine on global food security, FAO has released online 3 comprehensive information notes, 2 monthly FAO food price index reports, and several emergency crisis response reports with 6 proposals. Let me focus on the most relevant one for this meeting.

22. FAO is proposing for a global Food Import Financing Facility (FIFF), which aims to present a mechanism to respond to rising food import and input costs.

23. This proposal is complementary to the mechanisms we have in the UN and the Bretton Woods institutions to tackle such crises.

24. It can provide detailed and accurate information to the several Credit Facilities of IMF on the food import needs of countries and their cost, so that the problems on Balance of Payments are identified in advance.

25. The mechanism is strictly based on urgent needs and limited to low, and lower middle-income net food-importing countries.

26. The FIFF has been designed to include smart conditionality to act as a stabilizer for future funding.

27. Eligible countries will commit to increase investments in agrifood systems, thus increasing resilience for the future.

28. The FIFF has been stress-tested by FAO for its impact on the global markets, and would be convenient to administrate and scale up.

Excellences,

29. The conflict’s intensity and duration remain uncertain.

30. The disruptions to agricultural activities of these two major food producers and exporters are seriously threatening food security directly and indirectly.

31. It is imperative to learn from these two overlapping shocks of the pandemic and the war in Ukraine.

32. The lesson learned is that we need to increase agricultural production and productivity in the world while being sustainable. The investment, agile policies, and science and innovation will allow us achieve this.

33. It is high time to work together for ending hunger and malnutrition in the world.

Thank you.