2nd G20 SHERPA MEETING Food and Agriculture Supply Chain: Recent Developments and Future Challenges Statement
by Dr QU Dongyu, FAO Director-General
10/07/2022
2nd G20 SHERPA MEETING
Food and Agriculture Supply Chain: Recent Developments and Future Challenges
Statement
By
Dr QU Dongyu, FAO Director-General
10 July 2022
Bali, Indonesia
Excellences,
1. Recent global events, from the COVID-19 pandemic to the climate crisis, multiple conflicts around the world and the war in Ukraine, have all heavily affected agrifood systems in multiple ways.
2. On 6 July, FAO together with partners, launched the 2022 edition of the State of Food Security and Nutrition in the World (SOFI) Report,
3. Which confirms that world hunger has increased again in 2022, reflecting growing inequalities across and within countries.
4. 828 million people suffered from hunger in 2021.
5. This is an increase of 46 million from 2020, and 150 million from 2019 before the pandemic.
6. 2.3 billion people were moderately or severely food insecure in 2021 - this is 350 million more people compared to 2019.
7. The war in Ukraine has added to an already challenging situation,
8. And could lead to an increase of 13 million more chronic undernourished people this year, and 17 million more in 2023, according to FAO estimates.
9. The war in Ukraine has also had a significant impact on some wheat trade networks, which are highly concentrated.
10. For trade, the risk of fragmenting global agrifood markets poses additional threats to world food security.
Excellences,
11. Another global challenge is rising inflation.
12. World food prices have been rising since mid-2020 due to many factors.
13. The war has increased the pressure on prices, with the FAO Food Price Index at 160 points, reaching an all-time high in March 2022.
14. The Food Price Index tracks monthly changes in the international prices of a basket of commonly-traded food commodities.
15. In June 2022, the FAO Food Price Index averaged 154.2 points, down 2.3% from May, but it remained 23.1% higher than in June 2021.
16. The drop in June reflects declines in the international prices of vegetable oils, cereals and sugar, while dairy and meat prices increased.
17. FAO calculates that the increase in the food import bill for the 62 most vulnerable countries amounts to 24.6 billion US Dollars in 2022, and it affects 1.79 billion people.
18. In response to this rising challenge, FAO developed a proposal for a global Food Import Financing Facility,
19. Which aims to assist countries in financing their food purchases to minimize any risk of social unrest.
20. This proposal should be implemented by the IMF under their balance of payments financial mechanism.
21. Fertilizer prices have also increased significantly.
22. Since mid-2021, average fertilizer prices have almost tripled, together with rising energy prices.
23. Changes in trade routes and current constrains will further increase the global fertilizer price.
24. If countries that produce major food staples, such as rice, are not able to get enough fertilizers in the upcoming planting season, this could affect the global supply of food,
25. And could result in both a food access crises now, and a food availability crisis in the coming months and years.
26. Prices of other inputs, such seeds and pesticides, also increased.
27. This poses a risk if farmers choose to reduce input use, which would reduce yields, and this could further worsen the high prices-low production cycle.
28. Trade reduction and interruption of the supply chain are of major concern.
29. At the end of May, 22 countries had implemented export restrictions through 39 measures ranging from bans to export taxes affecting almost 16% of agricultural exports, on a kilocalorie basis.
30. This is similar to the levels we had during the 2008 food price crises.
Excellences,
31. To address these challenges we need to:
32. First: invest in countries most in need that are most affected by the increase in food prices.
33. In addition to providing timely food aid, we must also focus on boosting productivity by paying more attention on producing nutritious food locally.
34. Currently only 8% of all food security funding in emergencies goes to assist agricultural production.
35. We know that investing in agriculture and rural livelihoods is strategic, and 7 to 10 times more cost-effective than traditional assistance.
36. Second: put policies in place that both increase productivity and protect natural resources, and that are specific to regional needs.
37. Transforming agrifood systems to deliver healthy, nutritious diets, and with more equitable outcomes, will require significant financial investment, estimated at 8% of the size of the agrifood market.
38. We also need to accelerate the African Continental Free Trade Area by accelerating the normative work on food safety standards, and by reducing tariffs and non-tariff barriers.
39. Intraregional trade should be accelerated in all regions of the World.
40. Investment should be in hard infrastructure such as roads, irrigation, electrification, and digitalization,
41. As well as in value chain infrastructure, such as storage and cooling facilities, and banking and insurance infrastructure.
42. Third: ensure better and more efficient use of available outputs and inputs - we need to produce more with less.
43. Let me provide 3 examples:
44. One: Water.
45. Global water stress remains a priority, and is of top priority for the Near East.
46. 1 billion hectares of agricultural land faces severe water constraints; 800 million hectares of rainfed cropland and pastureland are severely affected by recurring drought; and 171 million hectares of irrigated cropland are under high to very high water stress.
47. We need to use the best available technologies and regulations for efficient gains in the way we use water in agriculture.
48. Two: Food loss and waste.
49. The current high amounts of food loss and waste could feed around 1.26 billion people per year, and result in a large negative impact on the environment.
50. Three: we need to use our fertilizers more efficiently.
51. We should use technology to improve fertilizer use efficiency and science based re-distribution of applications across the production process,
52. Supported by fast implementation of detailed soil maps to assist the most vulnerable countries to use their fertilizers efficiently.
53. We also need to shift the way fertilizers are being produced, with the shift to green ammonia.
54. Key accelerators to all these points are innovation, science and technology.
55. Investment in research and development is the highest marginal utility for profits.
56. Technological and social innovation can reduce market failures and improve market functioning.
57. Digital agrifood systems should be scaled up to help the transformation of family farmers.
Excellences,
58. Coordinated action within this Group, as well as beyond the G20, is critical to facilitate the smooth functioning of global food markets and to secure food supply for all.
59. We must continue to work together in an efficient, effective and coherent manner to accelerate the transformation of our agrifood systems to be more efficient, more inclusive, more resilient and more sustainable,
60. For better production, better nutrition, a better environment and a better life for all, leaving no one behind.
61. I reaffirm FAO’s full commitment to work with all partners to overcome the challenges.
62. Thank you.