21 - The Global Grain Trade

Summary

In the midst of the COVID-19 pandemic, David Beasley, the Head of the World Food Programme, in his address to the Security Council of the United Nations (henceforth, the ‘UN’) stated that the world had to “act fast” to avoid “multiple famines of biblical proportions within a short few months”. While the UN feared that severe global food shortages would strike many parts of the world, prices for corn, wheat and soybeans have not increased in response to the spike in demand caused by the onset of the pandemic. Instead, the most active corn futures on the Chicago Board of Trade (henceforth, the ‘CBOT’), which is the world’s most important commodity exchange, have fallen by 16% since the start of 2020, while wheat has fallen by nearly 6% and soybeans by nearly 5%. Farmers are the ones who are losing profits. For instance, in the US, 8% more farmers filed for bankruptcy in 2020, than in the first half of 2019, and this number has been steadily increasing for the past 5 years. Across Africa, millions of farmers are facing economic devastation as the crop prices offered to them continue to fall and, in some cases, amount to less than the farmers’ production costs. In Eurasia, particularly in Russia and Ukraine, farmers have been seriously impacted by the pandemic as well. This issue of farmers being subject to profit losses has been witnessed across the world, but there is no systemic change to their desperate economic situations on the horizon.