NEW YORK, NEW YORK, US — Global wheat inventories currently stand at about 10 weeks of global consumption, a food supply expert said during a special meeting of the United Nations Security Council on May 19.
Sara Menker, chief executive officer of Gro Intelligence, an organization that gathers and analyzes global food and agricultural data, said she disputes official government agency estimates that put global wheat inventories at 33% of annual consumption, countering inventories are closer to 20%.
“It is important to note that the lowest grain inventory levels the world has ever seen are now occurring while access to fertilizers is highly constrained, and drought in wheat growing regions around the world is the most extreme it’s been in over 20 years,” Menker said. “Similar inventory concerns also apply to corn and other grains. Government estimates are not adding up.”
Menker told the security council that while much of the blame for the burgeoning food security crisis has focused on the Russia-Ukraine war that has severely limited agricultural exports from that region, it has merely “added fuel to a fire that was long burning.”
“I share this because we believe it’s important for you all to understand that even if the war were to end tomorrow, our food security problem isn’t going away anytime soon without concerted action,” she said.
Menker cited five major factors occurring simultaneously that are “each individually extraordinary.” They are:
- Lack of fertilizer
- Climate disruptions
- Record-low inventories in cooking oils
- Record-low inventories of grains
- Logistical bottlenecks that already have started to unravel decades of global economic progress.
Global fertilizer prices have nearly tripled year-on-year and quadrupled over the past two years because of supply shocks driven by logistical bottlenecks, restrictions on natural gas that impact the ability to produce fertilizer, and sanctions and export restrictions amidst the Russia Ukraine war, Menker said.
“This risks significant crop yield reductions in key producing regions, such as Brazil, the United States, and Western Europe later this year and next year, severely impacting global food security and inflation for the next three to five years at a minimum,” she said.
Global drought conditions for wheat are the worst in over 20 years around the world. The United States and Brazil, the world’s two largest exporters of agricultural products, also are experiencing extreme droughts. She noted that Brazil’s cropland soil moisture is at a 20-year low.
The price of traditionally cheap palm oil has nearly tripled in the last two years, driven by increased biofuels demand, drought in regions that produce alternative cooking oils such as Brazil and Canada, record import demand from China and the loss of nearly 75% of global sunflower oil exports due to the Russia-Ukraine war. The recent export ban in Indonesia, the world’s largest palm oil producer, which is responsible for 60% of global production, has added significant upward price pressure to vegetable oils, Menker said.
As for grains, Menker said verifiable data from public and private sources that Gro Intelligence organizes and then builds statistical models to connect the dots between its platform shows that global wheat inventories are at a level not seen since the financial and commodity crisis of 2007 and 2008.
“Conditions today are worse than those experienced in 2007 and 2008,” she added.
Logistical challenges, which began at the onset of the pandemic more than two years ago, have been exacerbated by other factors such as the Russia-Ukraine war, Menker said.
“Russia and Ukraine used to provide nearly a third of the world’s wheat exports and are in the top five exporters of corn globally,” she said. “Combined, they used to export 75% of global sunflower oil supplies. All Ukrainian ports remain closed, making it impossible to move any of Ukraine’s harvested grain across its borders. Shifting to rail will move less than 10% of the prewar flow. It’s not enough. Russian exports, which also include fertilizer, are limited because of Black Sea maritime hazards.”
Gro Intelligence estimates show that price increases in major food crops year to date has made an additional 400 million people food insecure.
“There are a few food security statistics shared so I want to define this as the number of people at $3.59 a day,” Menker said. “To put this into perspective, that is equivalent to the number of people that China has taken out of poverty in the last 20 years. In five months, we have undone 20 years of progress.”
She added that the organization’s economic shock models show that year-to-date changes in prices of agricultural products already have affected some economies by 3% to 5% of their GDP. Countries disproportionately affected are in regions such as North Africa, the Middle East, the Horn of Africa and West and Central Asia.
“Without substantial immediate and aggressive coordinated global actions, we stand the risk of an extraordinary amount of both human suffering and economic damage,” Menker said. “This isn’t cyclical; this is seismic. It’s a once in a generation occurrence that can dramatically reshape the geopolitical era.”