Food Piles Up at Ports as Global Hunger Rises Due to Higher Dollar

Due to the rise in the value of the US dollar, nations currently experiencing a historic global food crisis are trying to find dollars to pay their bills. Importers in Ghana have issued a scarcity alert as Christmas approaches. For example, in recent weeks, thousands of containers full of food have stacked up at ports in Pakistan. In Egypt, independent bakers have boosted wheat prices after certain flour mills ran out of grain due to delays at customs.

High-interest rates, a rising currency, and rising commodity prices are having a devastating impact on nations’ ability to buy food since these countries must pay in dollars. A lack of foreign currency reserves has made obtaining dollars difficult, and banks are sometimes hesitant to release payments.

Alex Sanfeliu, the global trading chief for grain giant Cargill Inc., has remarked, “They cannot afford it, they cannot pay for these commodities.” While this issue is not new for many nations or exclusive to farm products, the pressure on global food systems has increased. It is because of a decrease in buying power and currency shortages as a result of Russia’s invasion of Ukraine.

Food Crisis

The World Food Program has declared that the world is experiencing the worst food shortage in recent history. The International Monetary Fund has alerted of a disaster at least as severe as the food emergency in 2007–08. US Treasury Secretary Janet Yellen has also called for increased food aid for the most susceptible.

Many importers are having trouble keeping their cargo out of customs due to growing prices, decreasing capital, and a lack of readily available currency. This causes goods to be held up at ports or even rerouted.

According to Africa and commodities market expert Tedd George, “there was always a historic burden on paying these payments, but at the moment it’s excruciating pressure.”

There are concerns about availability before Christmas in Ghana, where the cedi has lost roughly 44% to the dollar this year. It also puts it the second-worst-performing currency in the world.

Samson Asaki Awingobit, executive secretary of Ghana’s importers and exporters group, which comprises purchasers of cereals, flour, and rice, stated, “We anticipate there is going to be a scarcity of various food commodities.” We are in a desperate scenario as the dollar devours the cedi.

It’s true that certain nations might find some solace in making purchases in other currencies like the euro. Energy-exporting states can reap the benefits of earnings made in other markets. Consumers should take heart from the six-month downward trend in the price of food commodities throughout the world.

A rise in the Value of Currency

Economist Monika Tothova of the United Nations Food and Agriculture Organization predicts a new peak in the cost of importing food for the world this year. Also, the rising value of the dollar might reduce some of that value.

Despite improvements, the situation remains precarious. As the conflict in Ukraine worsens, there are fresh concerns concerning supplies leaving the Black Sea area and the viability of the agreement to export grains from Ukrainian ports.

Stocks are low, and rising fertilizer and energy prices are driving up the cost of producing food, all of which have contributed to recent months of volatility. The IMF warned this week that the strength of the dollar against currencies in emerging and developing economies would contribute to inflation and debt pressures as the Federal Reserve continues to tighten monetary policy.

According to Muzzammil Rauf Chappal, head of the Cereal Association of Pakistan, prices have soared as containers containing food items like chickpeas and other pulses. They have stacked up at ports in flood-ravaged Pakistan due to government measures to restrict foreign-exchange outflows.

A new finance minister was appointed, and he has promised to clear firms’ delayed transactions due to a lack of dollars on the interbank market, so things have calmed down. As the largest private-sector wheat importer in the nation, Chappal’s firm was in a precarious position. We anticipated a severe grain shortage throughout the nation.

Egypt – Wheat Importer

In Egypt, one of the world’s largest importers of wheat, shortages have hit private mills that provide flour for bread not covered by the government’s subsidy scheme. According to the Chamber of Cereal Industry, almost 80% of millers have run out of wheat and suspended operations since the start of last month. Also, approximately 700,000 tonnes of grain were stalled at the country’s ports.

On Wednesday, the Supply Ministry said it will begin supplying wheat and flour to private mills and pasta companies. Sanfeliu, of Cargill, predicts a 6% decline in global wheat trade flow over the next few months. It drops of 3% is expected in maize and soybean meal flows due to developing nations’ inability to pay for food and animal feed.

A procurement officer with the Bangladeshi conglomerate Meghna Group of Industries stated that the rising cost of wheat imports as a result of the higher currency had forced the firm to consider cutting down on the quantity of wheat it had planned to purchase before the war broke out. “The corporation is losing a lot of money due to currency swings,” Shahriar remarked. As one of us said, “We have never seen anything like this before.”