Food Security

The recent attacks of Yemen-based Houthi rebels on ships in the Red Sea have paralyzed shipping through the Suez Canal, forcing exporters in the Black Sea region and elsewhere to consider alternative—and more costly—shipping routes. In early January, A.P. Moller-Maersk A/S, the world's second-largest container ship company, announced it would suspend shipments through the Red Sea. Trade volumes in the Suez Canal are down an estimated 40% since the attacks began.

Recent events such as the war in Ukraine and the El Niño weather cycle have demonstrated how shocks triggering changes in production and distribution of food in one country or region can reverberate around the world, eroding food security for millions if not billions. Efficient, agile, and diverse trade networks can help countries and suppliers to cope with these shocks and strengthen food security. These networks are especially relevant for Latin America and the Caribbean (LAC).

International food commodity prices have experienced a series of shocks over the past decade. The prices of rice, maize, and wheat spiked in 2007-08 as a result of supply shocks, demand for biofuels, and export trade restrictions. Commodity prices increased again in 2010-11. And most recently, global supply chain disruptions in the aftermath of the COVID-19 pandemic and Russia’s invasion of Ukraine sent international food and fertilizer prices soaring, though they have moderated somewhat after peaking in mid-2022.

Since peaking in April 2022, global agricultural food commodity prices have declined by almost 25% as of October 2023, according to the UN Food and Agriculture Organization’s (FAO) food price index (Figure 1). Contributing to the decrease were strong harvests in large food producing countries, steep declines in shipping costs, and more affordable energy and fertilizer prices (Figure 2).

The BIMSTEC - Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation – country group consists of Bangladesh, Bhutan, India, Nepal, Sri Lanka, Myanmar, and Thailand. Together, these countries are home to more than 712 food-insecure people, and the prevalence of food insecurity has increased in the majority of the region since 2014. Given this food security situation, India’s recent export ban of non-basmati white rice and export duty on parboiled rice raise significant concerns for the region.