The Emerging Global Food Security Risk
Russia is at the cusp of invading Ukraine. Through history conflicts big and small are rarely contained because their repercussions are global - socially, politically and economically. These repercussions are particularly acute in a high-tech, globalized society because the effects impact everything a mere second after the first the bullet finds its victim.
In this particular powder keg these impacts is on the global grain price & supply. Russia and Ukraine, the two countries at the brink of war, account for 23% of global wheat exports, which reached their highest levels in a decade in 2020, and rank highly in corn and barley exports.
An analysis of two important pro-US countries highly dependent on Russian and Ukrainian agricultural exports are Turkey and Egypt both of which have a disturbing at knife’s edge socio-economic-politically vulnerability should there be a Russo-Ukrainian wheat export reduction.
Turkey’s Import Wheat Dependency
Wheat is an important staple of Turkish cuisine and is heavily reliant on imports. The following are the challenges:
· According to the World Bank, Turkey had a population of 84.34 million in 2020 just ahead of Germany with a GDP $720 billion (# 18 globally) just ahead of Saudi Arabia.
· Turkey imports wheat from Russia and Ukraine.
· The Turkish Statistical Institute (TUIK) wheat sufficiency rate 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 cultivation dropped precipitously by 14% in 2020, the lowest in 15 years, due to severe droughts in the harvesting regions.
· The degradation of cultivation has been long-term because its 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, considerably more expensive.
Egypt | Import Wheat Dependency
· According to the World Bank, Egypt had a population of 102 million in 2020 with a GDP $363 billion (# 42 globally) slightly below South Africa.
· Egypt is far more dependent on imported wheat than Turkey from Russia/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 wheat production.
· Government sources indicate that Egypt has a wheat stock of 5-6 months.
· Despite reassuring government agency figures, President Sisi announced the 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 all agricultural products creating a far greater reliance on increasingly more expensive grains to offset low domestic yields.
· Imported wheat and other grains originate from an emerging hot-spot in Russia and Ukraine.
· Grain is heavily-subsidized. Even with import and quantity guarantees, world agricultural prices have increased dramatically which must be purchased with rapidly depreciating local currencies (converted to US dollars) to feed their citizens in order to maintain internal security.
· Higher fertilizer prices, higher fuel costs, poor harvests and port backlogs are exacerbating these price hikes.
· Finally, the straw that breaks the camel’s back, higher Russian tax on exports on agricultural goods are designed to keep excess stocks in Russia.
The following chart entitled Food and Agricultural Organization of the United Nations (FAO) food price index indicates an explosive price increase in major food categories. These food prices will skyrocket as hostilities boil in Ukraine putting unsupportable pressure on Turkey and Egypt’s foreign reserves in purchasing essential foods.
Low Crop Yields | Not A Drop to be Found
The Middle East suffered through a difficult drought in 2021 adversely impacting the harvest. Turkey and Egypt are located in the heart of extreme water stress which explains their increasing dependency on food imports. This worsening dependence has become an endemic crisis and could plunge these societies into civil disorder.
The following chart entitled Where Water Street Will Be the Highest in 2040 provided by the World Sources Institute via the Economist Intelligence Unit. The UN defines “water stress” as when a country withdraws least 25% of its renewable freshwater supply.
Supporting the Autocracies | US & Western Interests
For the aforementioned reasons both leaderships are deceivingly brittle and face greater challenges in managing a socio-economic powder keg. Because of their high level of unpopularity, it may not take much more to trigger bloody civil unrest in either country.
Turkey and Egypt are well aware that the US can be counted on through various administrations for support when things get dire. To protect its strategic interests the US, like all preceding empires, aggressively practices the art of realpolitik. Geographically Turkey and Egypt are located in critical regions from which the US can monitor and engage Russian and Russo-Iranian backed extremists. Because Turkey and Egypt are strategic assets to the US and Europe, they can’t allow either country to become a failed state.
Turkey is the geographical gatekeeper between the Middle East and Europe as well as the caretaker, albeit well-paid by the EU, of millions of refugees to keep them fed and keep them there.
Egypt is the most populous Middle East Arab country. Any collapse of change of regime to a hostile US-European leadership like the Taliban in Afghanistan will trigger a period of unacceptable instability.
Turkey and Egypt | Putin’s Collateral Damage
Whether by default or design why would Putin turn his back on his autocratic brotherhood in critical strategic areas? Lack of professional courtesy? Because both are US allies, perhaps for Russia “It’s nothing personal, just business” to reduce, if not eliminate, US and western influence in the region.
By creating internal havoc in Turkey to neutralize Nato’s second largest army, guardian of the Black Sea and with intense internal civil unrest, Turkey would be unable to assist Nato.
Chaos in Egypt might spillover and impact Suez Canal operations by choking off world trade and military maritime movements.
The enormous cost for the US to export wheat and other grains to Turkey and Egypt in a world whose yields are falling will exceed the economic sanctions damage done to Russia.
Putin’s Scapegoat
Putin’s public relations machinery is far more sophisticated than the truncheon-like explanations of the Soviet-era. Putin’s public relations tactics are akin to the old joke about playing chess with a pigeon: the pigeon will knock over all the pieces, defecate on the board, fly away and tell everyone he won.
This is why they can create an absurd, yet mildly believable narrative to explain why the US is at fault. For example Russia can craftily engineer a narrative explaining how draconian sanctions against them prevent the export of critical agricultural goods to stave off a humanitarian crisis and civil unrest in Turkey and Egypt.
Conclusion
Despite their best efforts for years to accommodate Russian business and political interests, Turkey and Egypt are Russia’s hostages and perhaps back-door bargaining chips with the US/EU to acquiesce to Russia’s demands.
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The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security.