The Emerging Global Food Security Risk

Russia is at the cusp of invading Ukraine. Throughhistory conflicts big and small are rarely contained because theirrepercussions are global - socially, politically and economically. Theserepercussions are particularly acute in a high-tech, globalized society becausethe effects impact everything a mere second after the first the bullet findsits victim.

In this particular powder keg these impacts is onthe global grain price & supply. Russia and Ukraine, the two countries at thebrink of war, account for 23% of global wheat exports, which reached theirhighest levels in a decade in 2020, and rank highly in corn and barley exports.

An analysis of two important pro-US countrieshighly dependent on Russian and Ukrainian agricultural exports are Turkey andEgypt both of which have a disturbing at knife’s edge socio-economic-politicallyvulnerability should there be a Russo-Ukrainian wheat export reduction.

Turkey’s Import Wheat Dependency

Wheat is an important staple of Turkish cuisine andis heavily reliant on imports. The following are the challenges:

·       According to the World Bank, Turkey had a population of84.34 million in 2020 just ahead of Germany with a GDP $720 billion (# 18globally) just ahead of Saudi Arabia.

·       Turkey imports wheat from Russia and Ukraine.

·       The Turkish Statistical Institute (TUIK) wheat sufficiencyrate measures the percent of wheat self-sufficiency which present-day is 89.5%.This means 10.5% of wheat requirements must be imported.

·       With respect to domestic production, Turkish cultivationdropped precipitously by 14% in 2020, the lowest in 15 years, due to severedroughts in the harvesting regions.

·       The degradation of cultivation has been long-term becauseits fields have shrunk about 25% during the past decade.

·       The alarming depreciation of the Turkish lira (44%depreciation in 2021) makes imported foodstuffs, which are heavily subsidized, considerablymore expensive.

Egypt | Import Wheat Dependency

·       According to the World Bank, Egypt had a population of 102 million in2020 with a GDP $363 billion (# 42 globally) slightly below South Africa.

·       Egypt is far more dependent on imported wheat than Turkey fromRussia/Ukraine which fulfills 85% of its needs.

·       Egypt is the world’s largest wheat purchaser.

·       Egypt is Ukraine’s largest purchaser – 14% of Ukraine’s total wheatproduction.

·       Government sources indicate that Egypt has a wheat stock of 5-6 months.

·       Despite reassuring government agency figures, President Sisi announcedthe possibility of food rations limited to 2 beneficiaries per family.

Turkish-Egyptian Food Security Commonalities

·       A severe drought in the Middle East in 2021 has impacted allagricultural products creating a far greater reliance on increasingly moreexpensive grains to offset low domestic yields.

·       Imported wheat and other grains originate from an emerging hot-spot inRussia and Ukraine.

·       Grain is heavily-subsidized. Even with import and quantity guarantees,world agricultural prices have increased dramatically which must be purchasedwith rapidly depreciating local currencies (converted to US dollars) to feedtheir citizens in order to maintain internal security.

·       Higher fertilizer prices, higher fuel costs, poor harvests and portbacklogs are exacerbating these price hikes.

·       Finally, the straw that breaks the camel’s back, higher Russian tax onexports on agricultural goods are designed to keep excess stocks in Russia.

The following chart entitled Food and AgriculturalOrganization of the United Nations (FAO) food price index indicates an explosiveprice increase in major food categories. These food prices will skyrocket ashostilities boil in Ukraine putting unsupportable pressure on Turkey and Egypt’sforeign reserves in purchasing essential foods.

Low Crop Yields | Not A Drop to be Found

The Middle East suffered through a difficultdrought in 2021 adversely impacting the harvest. Turkey and Egypt are locatedin the heart of extreme water stress which explains their increasing dependencyon food imports. This worsening dependence has become an endemic crisis and couldplunge these societies into civil disorder.

The following chart entitled Where Water Street Will Be theHighest in 2040 provided by the World Sources Institute via the Economist IntelligenceUnit. The UN defines “water stress” as when a country withdraws least 25% ofits renewable freshwater supply.

Supporting the Autocracies | US & WesternInterests

For the aforementioned reasons both leaderships aredeceivingly brittle and face greater challenges in managing a socio-economicpowder keg. Because of their high level of unpopularity, it may not take muchmore to trigger bloody civil unrest in either country.

Turkey and Egypt are well aware that the US can becounted on through various administrations for support when things get dire. Toprotect its strategic interests the US, like all preceding empires, aggressivelypractices the art of realpolitik. Geographically Turkey and Egypt arelocated in critical regions from which the US can monitor and engage Russianand Russo-Iranian backed extremists. Because Turkey and Egypt are strategicassets to the US and Europe, they can’t allow either country to become a failedstate.

Turkey is the geographical gatekeeper between theMiddle East and Europe as well as the caretaker, albeit well-paid by the EU, ofmillions of refugees to keep them fed and keep them there.

Egypt is the most populous Middle East Arabcountry. Any collapse of change of regime to a hostile US-European leadershiplike the Taliban in Afghanistan will trigger a period of unacceptableinstability.

Turkey and Egypt | Putin’s Collateral Damage

Whether by default or design why would Putin turnhis back on his autocratic brotherhood in critical strategic areas? Lack ofprofessional courtesy? Because both are US allies, perhaps for Russia “It’s nothingpersonal, just business” to reduce, if not eliminate, US and western influence inthe region.

By creating internal havoc in Turkey to neutralizeNato’s second largest army, guardian of the Black Sea and with intense internalcivil unrest, Turkey would be unable to assist Nato.

Chaos in Egypt might spillover and impact SuezCanal operations by choking off world trade and military maritime movements.

The enormous cost for the US to export wheat andother grains to Turkey and Egypt in a world whose yields are falling willexceed the economic sanctions damage done to Russia.

Putin’s Scapegoat

Putin’s public relations machinery is far moresophisticated than the truncheon-like explanations of the Soviet-era. Putin’s publicrelations tactics are akin to the old joke about playing chess with a pigeon: thepigeon will knock over all the pieces, defecate on the board, fly away and telleveryone he won.

This is why they can create an absurd, yet mildlybelievable narrative to explain why the US is at fault. For example Russia cancraftily engineer a narrative explaining how draconian sanctions against them preventthe export of critical agricultural goods to stave off a humanitarian crisis andcivil unrest in Turkey and Egypt.

Conclusion

Despite their best efforts for years to accommodateRussian business and political interests, Turkey and Egypt are Russia’s hostagesand perhaps back-door bargaining chips with the US/EU to acquiesce to Russia’sdemands.

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The Cerulean Council is a NYC-based think-tank thatprovides prescient, beyond-the-horizon, contrarian perspectives and riskassessments on geopolitical dynamics and global urban security.