2023: Humanity’s Trial Against The Global Food And Energy Crisis
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- 31 December 2022
Evaluations and meetings regarding the current global food and energy supply crisis under the umbrella of all international organizations since last October have been the scene of statements confirming that we are facing the worst global food and energy supply crisis in modern history. The connection between the two global crises is defined by a “crisis triangle” in which three main themes come together: The first theme is Climate, the second is Covid-19, and the third is the deep insecurity and conflict unleashed as a result of the Russia-Ukraine War. Experts from OECD member countries briefly refer to this table as “3C”.
One of the important issues linking the global energy crisis and the global food crisis is “fertilizer”. The reason for this is that fertilizers are a product made from fossil fuels and are an undeniable requirement for agricultural production. Besides the fact that the main raw materials playing part in the production of chemical fertilizers are natural gas, phosphorite, and potash salt, the means of access to ammonia, nitric acid, sulfuric acid and phosphoric acid, which are intermediate materials for the production of chemical fertilizer in the continent, are also discussed at the meetings under the umbrella of the OECD.
Because Africa, which is already struggling with the problem of drought due to climate change and the main and side effects consequences of the global pandemic,
is also facing serious difficulties in accessing the raw materials needed for agricultural products, food, and manufacturing due to the Russia-Ukraine War.
Türkiye stands out among the countries – the number of which could not be counted on the fingers of a hand – that are most calling for solutions to Africa’s broader problems, to overcome the obstacles at stake, to work day and night for lasting solutions. Both the OECD agriculture ministers meeting and the meetings held thereafter point out that “radical solutions” should be found for lands that have to use the most expensive inputs required for fertilizer and agricultural production, starting with Africa.
Countries under the umbrella of the OECD are aware that they need to act together effectively and with pragmatic solutions for the global food crisis, which is very strong due to the concerns that the crisis will worsen in 2023. Global climate change also necessitates joint research and development in order to improve agricultural production opportunities in drier conditions at higher temperatures.
Developing more durable products and transforming the weight of crops into such products, restructuring and making existing food banks more efficient, eliminating imbalances and ensuring synchronization between short and longterm investments in the agriculture and food industry are critical in this process. Besides, solutions, programs, and global calls that will radically change con- sumer behaviour, and the revision of logistics and packaging methodologies during production will remain on the agenda with the purpose of eliminating the global waste of agricultural and food products, which has reached USD 1 trillion. As a final point, redesign of food systems on a global scale and radical transformation are among the common determinations. Financing is a significant part of the solution. We are witnessing global calls for more innovative approaches in financing agriculture and food investments. The mentioned steps will undoubtedly intensify the interest of young people in the agricultural sector. The challenging process of 2023 in terms of global food supply security will also require more intense cooperation.
THE “MAIN CRISIS” WILL BE EXPERIENCED IN 2023
There are a few critical details that distinguish the “energy crisis” experienced on a global scale from the oil crises of the 1970s and make it into the “most dangerous” energy crisis the modern world has faced. First of all, the equation of the global energy crisis experienced now not only includes oil but also natural gas. Coal and nuclear energy may be also included. The second issue is that the energy crisis we experience this time is also an “energy transformation” crisis. The reason is that the countries that insisted on solving the “high inflation” process triggered by global energy and food prices with high central bank policy rates, also led to significant increases in credit costs. Therefore,
the costs of significant renewable energy investments such as solar, wind, geothermal, and hydro energy have increased greatly.
However, the current global energy crisis confirms once again how critical it is for the world’s leading economies to accelerate their transition to renewable energy and “the energy transformation”. Yet, as the financing cost of investments increases, both the “green energy transition” and the global “sustainable development” goals are at risk. In consideration that the oil crisis of the 1970s was a “price crisis”, the third detail is the fact that the global energy crisis experienced this time is a regional and global “supply” crisis beyond the “price” factor. In fact, the supply crisis deepened by the Russia-Ukraine War has driven the production and distribution of oil, natural gas, coal, and enriched uranium rods into a complicated state.
Another threatening issue for almost all continents is hydro energy. Having intensified due to global climate change and La Nina, the drought problem has been posing a significant risk since the beginning of last summer in terms of Europe’s hydropower capacity and even for the cooling of nuclear power plants. Therefore, at a time when natural gas and coal prices are volatile on a global scale, the fluctuation of the capacities of hydroelectric and nuclear power plants has left the world facing the first real energy crisis, as stated by Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA) at the OECD. Dr. Birol highlights that the concern that supply will not be able to meet demand in the global liquefied natural gas (LNG) markets and that the main oil producers cut production has triggered the “first real energy crisis” around the world.
Fatih Birol underlines that the next year will be very com- plicated considering that due to the Russia-Ukraine war, Europe’s LNG imports will increase on one side and fuel demand in China, particularly as of 2023, will increase and the global LNG market will have only 20 billion cubic meters of LNG capacity for 2023.
Therefore, experts remind us that somehow the autumn of 2022 will be managed and the main crisis will be experienced in the autumn of 2023 and the winter of 2024. Humanity is going through one of the most critical tests in its history during this food and energy crisis. Together, we will observe the positive contribution of Türkiye’s “humanitarian and entrepreneurial diplomacy” approach to this process.
Prof. Dr. Kerem Alkin – Economist/Lecturer under the Faculty of Business and Management Sciences at Istanbul Medipol University