Surging food prices: FAO calls for import financing facility for poorer nations at G20 meeting

Washington/Rome - The Food and Agriculture Organization of the United Nations (FAO) is calling for a global Food Import Financing Facility (FIFF) to help poorer countries deal with surging prices as a result of the war in Ukraine.

The FIFF, which is also aimed at increasing global agricultural production and productivity in a sustainable way, is one of six policy proposals put together by FAO in response to the crisis.

Russia and Ukraine are important players in the global food market, with almost 50 countries dependant on them for at least 30 percent of their wheat import needs. Russia 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. Energy prices have also been rising, mostly due to market conditions.

With the COVID-19 pandemic already squeezing budgets, the conflict in eastern Europe has pushed FAO's Food Price Index to an all-time high, hitting the vulnerable the most. Higher fertilizer prices, meanwhile, are putting future harvests at risk globally.

According to FAO simulations, the conflict could result in as many as 13.1 million more people going hungry between 2022 and 2026, compared to the baseline.

"The war can have multiple implications for global markets and food security," FAO Director-General QU Dongyu said today in a video message to a Group of 20 meeting of Finance Ministers and Central Bank Governors in Washington.

The FIFF, which would complement existing mechanisms within the UN system, would be strictly based on urgent needs and limited to low and lower middle-income net food-importing countries, Qu said.

In addition, it is designed to increase future resilience by asking eligible countries to commit to invest more in sustainable agrifood systems. Qu said the FIFF has been stress-tested by FAO for its impact on the global markets and would be convenient to administrate and scale up.

"The lesson learned is that we need to increase agricultural production and productivity in the world while being sustainable," Qu told the meeting. "It is high time to work together for ending hunger and malnutrition in the world."

Qu was invited to illustrate the economic consequences of the war in Ukraine, especially on the food security, by Indonesia, the current holder of the G20 presidency.