BCG envisages a solution involving a variety of actors, from international institutions to individual states, from the financial world to the private sector, including a key role for NGOs and the entire social sector.
Rising prices for certain products in the short term, massive shortages of commodities and a price shock in the long term are three factors that point towards a rather imminent crisis in the world of food, on a global scale.
The cause, says BCG, will not be a lack of food production, but the inability to distribute and store it equitably and efficiently. “The current emergency requires rapid and synergetic action, without which there is a risk of a food crisis that will hit developing economies in particular, which have already been sorely tested by the Covid-19 pandemic,” says Lamberto Biscarini, Managing Director and Senior Partner at BCG.
Swift intervention is needed, with coordinated measures, starting by sharing data that, like those provided by the World Bank, speak loud and clear: the price of food globally will rise by 23% in 2022, after already having risen by 31% in 2021. The US Consumer Price Index, often regarded as an indicator of food price inflation, is also going up, jumping 8.5 per cent last March, the highest year-on-year increase since 1981.
Just as troubling is the fact that many countries are also suffering from rising fuel prices and increasing debt burdens. A combination of causes compounded by the war between Russia and Ukraine, which are not only important wheat suppliers, but also exporters of 28% of the world's flour and 69% of global sunflower oil, and major producers of potash (a key ingredient in fertilizers).
Consequently, joint measures will need to be put in place, with the first step surely needing to be taken by the governments of the richer nations, who are responsible for funding the World Food Program and the NGOs engaged in humanitarian assistance in Ukraine and other regions most affected by the impact of the war.
Then, net wheat exporters will be called upon to come up with a coordinated strategy to release grain stocks and get them to where the need is greatest. Another key action item is to launch financial measures that will help rebuild Ukraine’s agricultural sector once the war is over, without forgetting Sub-Saharan African, South Asian and Central American countries which will need seeds and fertilisers to make up for the interruptions in sowing caused by the war.
These are the very countries that will have to restore and reassess their agricultural systems by seeking to improve their internal supply chains: producers will have to be incentivised to increase their harvests, diversifying their produce as much as possible. This can be achieved by improving access to credit, e.g. through ad hoc measures such as the G20 Global Agriculture and Food Security Program.
Ample space in the Boston Consulting Group report is set aside for actions by both the private sector and multilaterals.
As far as the private sector is concerned, the report urges them to continue supporting their Ukrainian counterparts and to share production, stockpiling and supply chain data. The pooling of technologies, business models and know-how is essential to foster production aimed at growing innovative and nutritious grains, first and foremost millet, sorghum and amaranth.
On the other hand, the role of multilateral agencies appears to be very complex: BCG advises the World Trade Organisation (WTO) to exempt the World Food Program and similar organisations from export restrictions, favouring the adoption of measures to streamline food purchasing for other emergency food assistance programs. Also important is restructuring debt or creating debt swaps that would bolster smallholder resilience, as well as creating innovative financial mechanisms that could help increase economic capacity in highly exposed countries.
Lastly, we find the world of NGOs and the social sector, which are urged to take on a wide range of measures – not only providing humanitarian relief, but also working with net-exporting countries, fostering a coordinated approach to increase access to fertilisers and other agricultural inputs, aiming to improve the sustainable efficiency of fertiliser use.
In conclusion, the BCG states in its report that it is crucial that all these actions, and the various actors mentioned above, be given equal importance and above all be conducted in parallel, as they will otherwise lose their effectiveness.