The leaders of the World Bank Group, the International Energy Agency, and the International Monetary Fund said on Monday that food security is increasingly at risk as the Middle East conflict affects global supply lines.
The impact is still “substantial, global, and highly asymmetric,” with energy importers—especially low-income nations—bearing the brunt, according to the three institutions, who met as part of a coordination group formed in early April to bolster their response to the conflict’s energy and economic aftermath.
In addition to raising worries about food security and job losses, the war has increased the cost of oil, gas, and fertilizers and reduced export earnings for several Middle Eastern oil and gas companies.
The organizations stated in a statement that “the situation remains very uncertain, and shipping through the Strait of Hormuz is yet to normalize.” They also noted that it would take time for world supplies of essential commodities to return to pre-conflict levels even if regular shipping flows resumed.
They cautioned that infrastructure damage might cause gasoline and fertilizer prices to stay high for a long time, and supply disruptions could lead to shortages of vital inputs in the agricultural, energy, and industrial sectors.
It was stated that the war’s aftermath has also resulted in job disruptions, population displacement, and a decline in travel and tourism—effects that may take some time to restore.
The meeting takes place before to the publication of important publications, such as the IMF’s World Economic Outlook and the IEA’s monthly Oil Market Report, which are both expected on Tuesday, April 14.
The organizations claimed to have addressed policy responses, situations in the most impacted nations, and updated assessments.
In order to provide coordinated support, including customized policy recommendations and, in the case of the IMF and World Bank, financial aid when needed, their teams are collaborating closely at both the national and international levels.
The statement stated, “We will continue to closely monitor and assess the impact of the war on energy markets, the global economy, and individual countries.” It also stated that cooperation will be extended to other international bodies in order to assist a recovery that results in jobs, growth, and stability.
The increasing strain on the world’s food systems is shown by recent data. Global food commodity prices increased for a second consecutive month in March, according to the Food and Agriculture Organization of the United Nations. This increase was mostly caused by rising energy costs associated with the intensifying violence in the Near East.
The FAO Food Price Index, which monitors monthly shifts in the prices of a basket of internationally traded food items, averaged 128.5 points in March, up 1.0% from the previous year and 2.4% from February.
The agency stated, “Price indices across all commodity groups, such as cereals, meat, dairy, vegetable oils, and sugar, rose to varying degrees, reflecting not only underlying market fundamentals but also responses to higher energy prices linked to the conflict escalation in the Near East.” Although prices are still below the peak reached in March 2022, they are trending upward once more.
As demand for biofuel feedstocks increased due to rising crude oil prices, vegetable oil prices saw one of the biggest rises, rising 5.1% month over month and standing 13.2% over their level a year earlier. Expectations that Brazil will use more sugarcane to produce ethanol led to a 7.2% increase in sugar prices.
Cereal prices increased more gradually; maize prices somewhat increased due to a robust global supply, while wheat prices increased due to worries about the drought in the United States and lower planting expectations in Australia. However, due to lower import demand and currency pressure in a number of importing nations, rice prices fell by 3.0%.
The markets for animal products displayed conflicting patterns. While dairy prices grew due to seasonal supply limits in Oceania, meat prices somewhat increased due to higher pig meat prices in the European Union and tighter cow supplies in Brazil.
Máximo Torero cautioned that significant disruption of global food systems could result from ongoing unrest in the Middle East, especially if energy supply routes are impacted.
He emphasized the crucial role the Strait of Hormuz plays in the worldwide flows of gasoline and fertilizer, saying, “If the conflict continues, it could eventually hit the supply of essential staples and push global prices higher.”
He continued by saying that nations that are already heavily indebted are most at risk because increased import prices may compel governments to reduce food purchases or switch to lower-quality supply, which would exacerbate food insecurity.
