I call this meeting to order.
Welcome to meeting number 22 of the House of Commons Standing Committee on Agriculture and Agri-Food. I'll start with a few reminders.
Today's meeting is taking place in a hybrid fashion, pursuant to the House order of November 25, 2021. The proceedings will be made available via the House of Commons website. So that you are aware, the webcast will always show the person speaking, rather than the entirety of the committee. We are televised today, colleagues. My understanding is that it will be available in the days ahead for CPAC, if they choose to use it. Screenshots or taking photos of your screen is not permitted.
Because we have a couple of new folks on the screen who are joining us as witnesses, for interpretation, you can toggle between English and French for your language of choice. That's at the bottom of your screen. Other than that, we would ask, for the benefit of our translators, that when you are speaking, you try to speak slowly so that they can keep up. Sometimes there is a bit of a delay, particularly virtually. We know we are going to do our best on that end.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, May 30, 2022, the committee is commencing its study of global food insecurity.
I would now like to welcome our witnesses for our first panel. Joining us today from Ukraine by video conference, we have Dr. Mariia Bogonos, who is the head of the centre for food and land use research at the Kyiv School of Economics. We have Mykhailo Amosov, who is a land use expert from the Center for Environmental Initiatives Ecoaction. We also have Yulia Klymenko, who is a member of Parliament at the Verkhovna Rada of Ukraine and the first deputy chairperson of the committee on transport and infrastructure.
Colleagues, I am required, according to the standing orders, to tell you that we had a bit of technical difficulty with Ms. Klymenko's microphone. We weren't able to get a complete test done, but we have played around. We hope we're able to hear her testimony. She has a device, and we're going to do our best to make it happen.
There are a couple of other things I would like to mention, colleagues. We have, of course, a number of CUPP interns in the room. This is the Canada-Ukraine parliamentary program. There are 41 interns on the Hill.
Given what we are studying today, which is global food insecurity as a direct result of the war in Ukraine, we're very thankful to have our witnesses on the screen.
To our witnesses, let me thank you.
The CUPP interns have also played an important role of engaging with folks in Ukraine. Thank you so much. Thank you for your work on the Hill, and thank you for being here today.
We're going to start with five-minute opening statements from each of our witnesses.
Dr. Mariia Bogonos, you have five minutes. I'll turn the floor over to you.
Thank you very much for this invitation.
I would like to start by reminding you that Ukraine, throughout its history, which spans far beyond 1991, has served as the breadbasket for many of its neighbouring and more distant regions. For example, in the 1950s, it produced more than 25% of the Soviet Union's grains. Over the last decade, Ukraine gained quite a prominent position in the global export of grain and sunflower oil. For example, in 2021, it exported 10% of global wheat exports and 50% of global sunflower oil exports.
On February 24, with the invasion by the Russian Federation on the northern, southern and eastern borders of Ukraine, the situation has changed dramatically. As of today, compared to February 2021, for example, Ukraine doesn't control more than 20% of its territory, which translates into roughly eight million hectares of arable land, which by comparison is 70% of arable land in Germany, which is one of the major grain exporters in the EU. It could be compared to approximately 20% of arable land in Canada.
What does this mean in terms of grain production? Ukraine is losing around 10 million tonnes of wheat, three million tonnes of corn, three million tonnes of barley and two million tonnes of sunflower oil. With this loss of land alone, Ukraine forgoes around 50% of its wheat exports and around 40% of its sunflower oil exports.
With the blockade of Azov and the Black Sea ports, the situation is even worse because, even in the best case scenario with the full capacity of the Ukrainian railway, the export capacity of Ukraine through the western borders is reduced at least by a factor of 10. We are comparing six million tonnes previously per month to 600,000 tonnes now, in the best case.
Why should we care about the exports? This is because sensitive countries, less food-secure countries like Egypt, Bangladesh, Yemen and Libya, are highly dependent on imports of wheat, which constitute more than 30% of the daily calorie intake of the population. They also depend a lot on imports from Ukraine. For example, on average, these four countries import more than 25% of wheat from Ukraine—some of them 50%, some of them 25%.
This means that the tremendous reduction in Ukrainian production and exports, in addition to the high prices for grains we had already observed before the war, will put these countries at a high risk of famine. In Ukraine, as well, the situation is not great because the affordability of food, meaning the financial ability of Ukrainians to buy food, is reduced by approximately 40%. This is a huge number. It means that we are maybe expecting certain nourishment issues in a larger population of Ukraine.
To conclude, unless stopped, the Russian Federation will continue devastating Ukrainian lands, and it will continue threatening domestic and global food security.
Good evening and good morning.
My name is Mykhailo Amosov. I'm here representing a government organization known as Ecoaction. Here are a few words about food security issues in Ukraine and in the world.
As the previous speaker said, a lot of agricultural land was actually occupied, bombed or attacked by Russian missiles and military equipment, etc. This illegal Russian invasion completely changed everything in every sector of the Ukrainian economy and agriculture.
This year, in 2022, Ukraine sowed seven million hectares less of agricultural crops than the previous year. It will cause shortages on the world food market. Actually, I see more risks for global food security than for only Ukrainian food security as a lot of countries, such as Yemen, Egypt, Indonesia and Bangladesh, really depend on Ukrainian grain exports. Even if these countries find alternatives to Ukrainian grain, these alternatives will be really expensive for them. We should find a way to help to export Ukrainian grains from Ukraine.
In Ukraine, we saw that the main problem is logistics for Ukrainian agribusiness, because a lot of silos and warehouses were destroyed by Russians. Actually, when all these objects were destroyed, we felt really big food shortages in the first days in supermarkets and in every store. We see this huge Ukrainian dependence on big agribusiness. Here we need to give more support for small and medium-sized Ukrainian agricultural farms, as we see them as more adaptable to new realities.
Even now, small, medium-sized and private households are producing more foods, more vegetables and more fruits than big agribusiness. For example, southern parts of Ukraine, like Kherson and Zaporizhzhia, were providing a lot of fruits and berries to other parts of Ukraine. Now it will be a big problem for Ukrainian citizens to build a healthy diet for everybody in Ukraine. These watermelons and cherries, etc., were produced by small and medium-sized farms. There was not a big involvement of the big agribusinesses there.
We need more state support for small farmers as they're more adaptable. As an environmental organization, we see it as more sustainable to the environment than big agribusiness.
That's it from my side. I'm happy to respond to any questions you have.
I'm Yulia Klymenko. I'm a member of the Parliament of Ukraine and first deputy of the infrastructure and transport committee and the former vice-minister of economy.
It's my honour and pleasure to address the committee of the House of Commons of Canada, a country that symbolized a dream coming true for those Ukrainians who came to the Canadian land 120 years ago and built with all the other nations a prosperous, humane, peaceful and beautiful country, which supports forces of good and justice.
As the topic of our discussion today is a global food crisis, let me start with a number of facts that will illustrate the role of Ukraine as a global food supplier and assess the devastation to the global food supply purposefully brought by the Russian invasion.
Ukraine feeds 400 million people worldwide, mostly in the low-income countries. Ukraine covers in global exports 10% of wheat, 15% of corn and 47% of sunflower oil. Ukraine exports 58 million tonnes of agricultural commodities annually, and 90% of it was shipped through the seaports of Azov and the Black Sea through a developed infrastructure ecosystem of river and seaport facilities equipped with storage and export laboratories. That ecosystem turned 32 million hectares of highly fertile, arable area land into a well-developing industry, next only probably to the Ukrainian IT sector.
On February 21, Russia starting bombing Ukrainian cities, killing civilians and purposely mining and blocking all Ukrainian ports, systemically targeting all grain storage facilities, laboratories, railway infrastructure, fuel storage and oil refineries.
Here, I would like you to focus on probably the most important message in my speech. The interruption of the global food supply is not collateral damage from the war in Ukraine. It is a planned hybrid weapon to further massively destabilize the global economy and political order through the instigation of famine in Africa and Asia, which will result in migration flooding into North America and western Europe.
We have seen this scenario previously played out by Russia in Syria, which caused massive migration to Europe and deformed European political processes. This time food is the weapon and the scale of the crisis will be much bigger. Additional benefits that Russia expects will be extra revenue resulting from the skyrocketing of global food and commodity prices in the same way as they benefit from growing energy prices.
That's why in the Kherson and Donetsk regions in Ukraine Russians have already stolen 500,000 tonnes of Ukrainian grain and moved it to the Russian territory for further export.
As of today, Ukraine stores 22 million tonnes of grain ready to be exported with 40 commercial vessels already loaded with one million tonnes of agricultural commodities. However, it's blocked in the Black Sea by Russia.
Understanding how critical our food supply is for many countries—for example, Egypt depends on Ukraine for 80% of its wheat consumption—and despite the war, Ukraine has invested into tripling the river, railway and road transportation capacity. Now we can transport 1.5 million tonnes of grain monthly through all these capacities. Previously, it was 0.5 million tonnes. To empty our storage before we get our new crop harvested will take at least 15 months even with increased capacity. You can see a fundamental problem here both for countries in need of supply and for the new harvest as we will have little storage facilities available for the new harvest.
Ukraine is ready to create all necessary conditions to resume exports from the port of Odessa. The issue is how to make sure that Russia doesn't affect the trade route or bomb the city of Odessa.
Ukraine is looking for a solution together with the UN and our western partners. However, no guarantees from Russia have been received so far. Russia's proposal to establish corridors for exporting Ukrainian grain in exchange for lifting sanctions is absolutely unacceptable.
Looking at this year's harvest, we should consider that 20% of Ukrainian land is occupied by Russians and 13% of agricultural land has unexploded mines and shells, resulting in tractors being blown up and farmers dying in the fields when they try to cultivate the land. Nevertheless, we have planted, and we expect to harvest 80% of all arable land in Ukraine.
However, the volume of the harvest will be significantly lower this year, resulting from severe shortages of fertilizers, fuel and labour. Most of the active qualified male population is fighting on the front lines. Those women and men working so hard in the fields and securing a further food supply deserve our appreciation and need our strong support in order to produce food for people in need in Africa and Asia.
This is what we need to do together to avoid global food crises: Ukraine has to defeat Russia in the sea, in the air and on the ground.
To unblock Ukrainian sea routes, the Ukrainian military has to sink 25 more Russian warships and submarines by anti-ship missiles and MLRS—multi-launch rocket systems—and demine the sea routes.
To protect our agricultural land and infrastructure and make sustainable transportation corridors, we will need to strengthen the air defence as well as hold sustainable ground defence operations against Russia's ground advances in eastern and southern Ukraine. That is why we call for a further supply of armed vehicles—LAVs, UAVs—artillery rounds of 155-millimetre NATO-standard ammunition, M777 howitzers and robotic demining systems.
To support Ukrainian agriculture export capacity, we need to reconstruct destroyed grain storage facilities and railway and road infrastructure and repair, re-equip and increase the number of export phytosanitary and veterinary laboratories.
All the above-mentioned help will allow us to end the war and will allow Ukrainians to return to their homes and jobs to harvest and feed the world, to teach, to treat and to create our bright future. It will be much cheaper to invest in heavy weapons for Ukraine than to try to resolve prolonged global famine, migration, unrest and geopolitical turmoil.
Also, I would like to end my presentation by thanking you for all of the political, financial and military support of Ukraine, as well as the warm and welcoming attitude of the Canadian people for all Ukrainians who have had to flee the war. I have a personal experience, with my two youngest sons staying for 100 days in Toronto with relatives while I'm staying in Kyiv and my husband is helping the Ukrainian army as a sniper. I hope to take my kids back in two weeks and make their future safe in Ukraine.
Thank you very much.
Yes, I think it's a good solution, because any dollar, Canadian, U.S. or any kind of dollar or euro coming to Russia is turned into bullets and killing us. They have to be isolated economically and politically and kept, with their Kremlin elite, out of the economic environment as well as the political environment.
Unfortunately, this is the only way you can punish Russia. You don't have a lot of trade with Russia, as I remember, in Canada. Fertilizers are important, but they have to pay a price for the violence, and we cannot feed the beast because this beast will definitely turn the global economy into dust.
What they are doing is destroying the global economy by destroying food supply chains and by increasing prices on energy, on food and many other things. You have to understand that, at this point in time, political, economic and continental war are linked to each other. They are destroying many economic models of other countries by sending migrants and by increasing prices. They are struggling in Europe because the energy prices, oil prices and food prices are sometimes double, triple or 40% more, making the European economy not very competitive to, for example, Asian economies.
Yes, unfortunately we have to—
I want to thank all of our panellists for being here on this very important day, and I want to start by saying that you have Canada's unwavering support with the humanitarian aid we're providing, the immigration measures, the economic sanctions and the military aid. As a nation, we stand shoulder to shoulder with you.
Even on the ground in all of our communities—I know I can speak for my own—we have grassroots organizations that are volunteering for supports and resources to help displaced people. You have our support, but the message I'm getting now is that Canada as a nation and the world need to step things up and do even more. That message is clear and resonating.
Ms. Klymenko, member of parliament and the first deputy chairman of the committee of transport and infrastructure in Ukraine, thank you for your service.
You said that right now it would take 15 months to empty the storage of grains that you have and, obviously, you said that would not allow space for the new harvest. You are working with the UN and other partners. I wonder if you can expand on what more we can do to help with that backlog, because that will get food out to people, and it will help with the new harvest coming in.
As I said, the only sustainable way, unfortunately, is the heavy weapons. We can clean and deblock our ports, but we need the heavy weapons, which we don't have, for cleaning and demining, and also anti-ship missiles. This is the best sustainable way.
Sure, we have to work in parallel with the UN and other countries to make temporary food corridors and export our grains. We understand that the world depends on our grains. We cannot allow ourselves just to burn it. Unfortunately, if we will not transport these grains, we will have to waste it, to burn it. We need to put new crops in the storage or to build new storage, which is almost impossible to build in two months. In two to three months, we will have a new crop, and we need to empty our existing facilities.
For that, we need two things. First is working on temporary food routes with the UN and western countries. We're asking you to put pressure on Russia to allow us to export these grains and feed people in Africa and Asia.
The second is that we're expecting that western countries will be united and will provide us with heavy weapons so that we can do these food routes more sustainably. Russians ships should be out of the Black Sea and the Azov sea, because they are violating international law. The Black Sea works under international law and rules. It's not only Ukrainian, so to say, shore and coast. It's international marine legislation. They're simply violating and blocking. We have a lot of foreign ships staying in our ports, because they don't allow them to get out from the ports.
There are the two ways: to work with international organizations on temporary routes, and to deblock the sea permanently and sustainably.
As I said, there are three basic things you can do. First of all are heavy weapons, and I understand that you don't have a whole range of weapons as does, for example, the U.S. or Europe, but you have armoured vehicles like LAVs and UAVs. You have artillery round ammunition. You have howitzers. You have robotic demining systems, so we can clean our agricultural land of mines and shells.
That is very important because, with what they are doing now, it is possible to mine land at a distance of 100 kilometres or 80 kilometres. Russian troops, for example, are staying 80 kilometres from agricultural land and they can just send mines this distance, so they are purposely destroying our agricultural land.
What we need also are robotic demining systems. We also need help to restore, repair and build new grain storage and laboratories, which are very important because all our laboratories.... To export grain you need to take samples to laboratories. Our laboratories are mainly in the ports because we export 90% of all our grain and oil through the ports. Now we need to build a new chain of laboratories for our western borders in railway stations, on roads, for customs, so to speak. We need to build that from scratch because, as I said, we didn't expect that we would need it on the railways or roads. We had two seas.
Those are actually two things we need and you can help us with those, but heavy weapons are our priority. We clearly understand that we need to push them back from our territory and that's the only sustainable way for us to harvest, to take our harvest and to grow more to harvest in the next year to feed the world. They will always blackmail the whole world through agricultural crisis and fuel crisis, which they are doing now.
It's only a matter of time before they say they will close sea routes for two weeks and they will not allow the UN to come. They do that all the time with humanitarian corridors. I can tell you that the Russians didn't allow people in the city of Mariupol to take these people, our people, Ukrainian citizens, through humanitarian corridors or to bring food there from non-occupied Ukrainian territories.
As a result, more than 20,000 Ukrainians died in this city without food, water, medicine and without being evacuated, so what do you expect from these people, from Russians who are doing this in a Russian-speaking city basically? It was a Russian-speaking city very close to the Russian border, and they did this to Mariupol. I do not believe in any so-called temporary solutions with Russians. Either you defeat them or they will blackmail the whole world.
Thank you for the question.
Yes, we have such a problem when agribusiness takes more land for their operations. It's already wild ecosystems. Maybe in the Soviet Union it was arable land, but then it went back to grasslands and even natural reserves. Then agribusiness took it into operation again. Now, because of the Russian aggression and the shortages in land for sowing campaigns, we see this risk as the demand for more land increases when we need more land, more grain and more exports, etc.
We compare it with Russian and Belarusian companies, which lease land in Ukraine from private persons, from government and from communities. We would like to take this land from Russian companies and put it into operation for Ukrainian farmers. That would be fair for us.
Those are the main points here.
Russian soldiers stole half a million tonnes of Ukrainian grain and moved it, as I said, to Russia and Syria. They're treating our farmers in occupied territories very badly. They are actually taking the grain for free or at very low prices. The grains and agricultural food is being sent to Russia and then sold either in occupied territories or in Russia at a very high price.
The difference of price in food between non-occupied territories and occupied territories of Ukraine is threefold, so you can buy a potato, for example, for 10 hryvnias in Kyiv, and for 30 hryvnias or more in Kherson, which is occupied. They are basically cheating people, and they're stealing grains and agricultural food.
What I can tell you? Civilians are not controlling occupied territories. Soldiers are making money by stealing agricultural products from the people who harvest it by hand.
On the fields, we have farmers, and they are probably much younger, because this is a very profitable business in Ukraine. We are probably one of the few countries without subsidies for the agricultural businesses because it's profitable. Many young people turn to agribusiness, because they can make a lot of money out of it, bring new technologies, increase productivity and many other things.
We don't have a problem like you do in Canada. Most of our farmers are young, more or less young, and they have new skills. They travel around the world to get more skills to put into the Ukrainian agricultural sector. The Ukrainian agricultural sector is three to four times less productive than yours or that of the U.S., so we have a long way to go to increase productivity and to make even more money for young farmers in Ukraine.
Thanks very much, Mr. Chair.
Thank you, to you and the members of the committee, for having me on the committee today. It's a real honour to be here.
As the chair was just saying, I'd like to say to our witnesses before I ask my questions, that I am the chair of the Canada-Ukraine Parliamentary Friendship Group, which is a group of members of Parliament of all parties.
MPs in our Parliament, as in your parliament, disagree on many things. In fact, in some cases it feels that perhaps we disagree on everything sometimes, but we are united on Ukraine so I want you to know that. I want to thank my colleagues of all parties for their unity and their strength and all that we're doing together to support the Ukrainian people.
Obviously the war in Ukraine is an existential crisis for Ukrainians. It's a humanitarian disaster with Russia committing genocide. The Canadian Parliament has proclaimed unanimous support for that declaration. It's a threat to global security and Canada's security, and it's of course a threat to the food supply around the world, as we've been discussing here today.
You and your people are not just fighting for Ukraine, but you're fighting for all of us, so we need to fight for you. Know that Canadian MPs of all parties are fighting for you.
I'd like to start by asking Ms. Bogonos a question, and I would ask you to be as brief as you can because I have a few other questions left.
What is the potential humanitarian impact of Russia's weaponization of the food supply? How bad could this be for the international community, for people around the world?
Because it's blackmailing.... Maybe that's a very short answer, but it's really blackmail. It's a violation of any and all international rules and order. You cannot, first, purposefully block ports, then allow two routes and ask about the lifting of all sanctions.
Next time, they will come and block the Baltic countries, and they will say, “Okay, we need $10 billion, then we will unblock it.” It's blackmail. It's criminal behaviour. You cannot accept it if you want to have worldwide rules and order, with people respecting international laws and order. You have to punish such blackmailers. You cannot agree to this blackmail. We need to find other ways besides the lifting of sanctions.
I think the routes are a temporary solution. Routes with UN convoys will allow us to export, but the most sustainable way is with heavy weapons.
Thank you for your support. I'm from the opposition, actually, but we are united in Ukraine because we understand we have one enemy. We have to fight this beast first, and then we will argue about other things inside Ukraine as opposition and ruling parties, so thank you for your support.
Ms. Klymenko, I would like to go back to you. You have very much identified—all of our witnesses have—the importance of securing safe passage from the port of Odessa through the Black Sea.
One of the problems is that we know Russia is engaged in criminal acts here. We know they are engaged in blackmail. The problem is that Russia has a permanent seat on the UN Security Council, which often hobbles that organization's effectiveness. What I want to know is.... In the Black Sea, you have major neighbours. You have Turkey, Bulgaria and Romania. Do you have any intelligence on what their naval forces are doing?
Outside of continuing to support Ukraine with heavy weapons, what does Canada need to do to push with international allies to try to secure that passage? Do freighters need naval escorts, etc.?
I would like to know in what practical terms we may have to work with the knowledge that Russia is going to try to block us at every turn.
We understand that Russia is blocking the UN and other international organizations. There are a lot of Russians not only in the UN but in MAGATE, which is the nuclear organization, etc.
We see these hidden links all the time. That's why we're systematically fighting against the presence of Russian employees and officials in international organizations. I'm doing it very carefully. I know all of them and I'm trying to take them out of these organizations, because they are heavily influencing decision-making, unfortunately. We can see it in infrastructure and other areas.
What you can do is jointly send a letter, make a decision in your committee or vote in Parliament to join these efforts of the convoys. They would not only be UN convoys, but U.S. and Canadian convoys. That will allow us to take grain out through the ports. This is the only sustainable and cheap way to do it, because if we go through the European ports and the European railways, etc., the price will increase because the logistical costs will be increased dramatically on the wheat. It's a commodity. Commodities are very sensitive to logistics. That's why.... The logistics cannot cost more than the price of the wheat.
I think you could join that, but my colleagues from the embassy or from the international committee will probably better understand what the practical tools are in the UN and other organizations to help with these routes. I will come back to you after our meeting. I'm not a specialist in these political international organizations.
Thank you, Ms. Klymenko. Thank you, Mr. MacGregor.
Colleagues, that does it. We actually ran a little bit over time but I think the testimony was that powerful. I was giving a little bit of leeway to make sure that we could have full answers.
On behalf of all my parliamentary colleagues to our witnesses, Ms. Klymenko, Ms. Bogonos and Mr. Amosov, thank you so much for agreeing to participate in the study and for being able to provide that important testimony. As has already been mentioned, we stand with you. We appreciate what you've had to inform us as Canadian parliamentarians here today, and indeed I'll give one final shout-out again to our Ukrainian interns on the Hill, many of whom have joined us in person for this proceeding.
Ms. Yulia Klymenko: Thank you too. Thank you for your help and support.
The Chair: Colleagues, we're going to take just a two-minute break. We are going to bring in the next panel, so please don't go far.
Colleagues, we're back. Thank you to our entire team for helping transition very quickly.
Our second panel for the second hour for the start of our study is joining us by teleconference today.
We have Paul Hagerman who's the director of public policy at the Canadian Foodgrains Bank. We have Maud Labat, trade counsellor, trade and economic section at the Delegation of the European Union to Canada. We have Maximo Torero Cullen who is the chief economist at the Food and Agriculture Organization of the United Nations.
Thank you so much to all the witnesses for their participation today.
Colleagues, we do have a procedural vote that is upcoming. We have the ability to not necessarily break at that time. I believe I have unanimous consent in the room to continue through the bells, and indeed I've talked to all of our colleagues. I think the preference is to vote by application such that we will stretch it as close as possible, given that we have these wonderful witnesses before us.
With that, I'm going to start with Ms. Labat.
You have five minutes for opening remarks.
Honourable members of Parliament, it is an honour for me and indeed for the European Union to contribute today to your reflection on the impact of Russia's illegal invasion of Ukraine.
This unwarranted invasion of Ukraine by Russia has once again shown how like-minded the European Union and Canada are in their assessment and in their reaction to the crisis. The European Union, like Canada, has adopted several sanctions packages against Russia, Russian entities and Russian nationals who support this war. The European Union, like Canada, is in parallel assessing the severe consequences that this war is having on the world, including on global food security.
In my remarks today, I will present three main points, first, our assessment of the situation in the European Union; second, our response; and third, how Canada as a like-minded country forms an integral part of the EU's response.
First of all, our assessment of the war in Ukraine in general is that this is really a man-made crisis and that Russia's threats and actions prove that Russia is using food, as it is using energy, as a geopolitical weapon, disregarding the lives and the well-being of people in Russia, in Ukraine and elsewhere. This war in Ukraine endangers the food security of millions of people around the world, and it is already affecting people in many countries. The first victims are obviously vulnerable populations around the world, particularly in low-income countries that depend on food and fertilizer imports.
This invasion is driving food prices up due to the increased cost of production, transport and freight insurance. Fertilizer prices have soared, including in the EU, and severely restrict their affordability for smallholder farmers in developing countries and in the EU.
Russia has also destroyed substantial food stocks production, as you heard earlier, as well as processing and transport capacities in Ukraine. We believe that the Russian military is deliberately targeting the Ukrainian agriculture sector. When Russia bombs Ukrainian fields and destroys and loots food storage, and when Russian warships block Black Sea trade routes, it not only affects Ukrainian wheat and grain exports. It also directly negatively impacts the daily lives of people in Africa and Asia.
As you heard before, the numbers may be a bit different, but our assessment is that Ukraine accounts for 10% of the world wheat market, 13% of the barley market, 15% of the maize market and over 50% of the world's sunflower oil market. We estimate that 49% of winter wheat, 38% of rye and 63% of corn to be harvested this summer is situated in zones that are at risk. Between 20% and 30% of the areas under winter cereal, maize and sunflower seed production in Ukraine will either remain unharvested or not be planted this spring. The consequence of this is that food is missing or becoming very expensive.
Some grain-producing countries are introducing export quotas. In addition, Russia, Belarus and China have announced export restrictions or bans on fertilizers and fertilizers' components, and the European Union, of course, is vigorously opposed to such trade restrictions.
Now, for us in the European Union, there is no immediate threat to food security because the European Union is a big producer and a net exporter of cereals, but the immediate impact rather lies in the increase of costs throughout the food supply chain and in the disruption of trade flows from and to Ukraine and Russia, as well as the impact on global food security.
If you take the EU's neighbourhood in North Africa and in the Middle East, both availability and affordability are at risk in wheat, which is their basic food staple. The same is true in sub-Saharan African and in Asia.
The European member states meeting in Versailles in mid-March 2022 called upon the European Commission to take urgent action to present options to address the rising food prices and the issue of global food security. On March 23, the European Commission adopted a communication on safeguarding food security and reinforcing the resilience of food systems.
Let me briefly take you through the actions that this communication sets out.
First, it presents our immediate actions to safeguard food security in Ukraine and around the world.
Second, we addressed the challenge of food stability in the EU food system with a range of measures to support our farmers and maintain affordability for our citizens.
Finally, we confirm the European agenda to make our food system sustainable and resilient for the years to come.
In the interest of time, I'll only cover the first two points, but I'm happy to answer questions about the rest.
Helping third countries and, of course, Ukraine—
Thank you very much, Excellencies and other honourable members of the committee.
What I want to raise first is that, based on our global food crises report released on May 4, already in 2021 around 193 million people were in crisis, which means IPC 3 or above. In this dramatic context, we now face the war in Ukraine.
The FAO sees three major types of risks for global food security. These are derived from the direct effects of the conflict upon global food and agriculture; those that are related to macro and cross-cutting factors; and those related to humanitarian risks, which, of course, are the humanitarian risks we see in Ukraine.
The macro impacts or the level of indebtedness of countries at this point—the poorer countries—and also the linkage between energy prices and fertilizers have put a significant risk into the agricultural sector that we didn't have before. As we all know, both Ukraine and the Russian Federation are important players in the global commodity markets, and the uncertainty surrounding the conflict prompted a significant further price increase in global markets, particularly those of wheat, maize and oilseeds. This increase came on top of already high prices driven by robust demand and by high input costs because of the COVID-19 recovery.
In March 2022, the food price index reached its highest level since its inception in 1990. The FAO food price index for May fell very moderately for the second consecutive month—it dropped only 0.6% from April—and this decline was mainly due to drops in the price indices of vegetable oils and dairy products, each falling by 3.5% month to month. By contrast, the cereal price index rose by 2.2% from April, reaching an all-time high and surpassing the March 2022 peak. The meat price index also increased, but very modestly, by 0.5%.
Export forecasts for wheat for both Ukraine and the Russian Federation were revised since the start of the conflict, and other market players, most notably India and the European Union, increased their exports. This partially compensated for the exports lost from the Black Sea region, leaving a relatively modest gap of about three million metric tons in the case of wheat.
The impact of the current crisis was significant for wheat-importing countries that were highly concentrated on Ukraine and the Russian Federation. Countries that are heavily reliant on wheat imports include Turkey and Egypt but also a number of sub-Saharan countries, including Eritrea, Somalia, Madagascar, Tanzania, Congo and Namibia. These countries need to identify new suppliers, which could pose a significant challenge, at least in the next six months. Also, of course, northern Africa and some countries in South Asia were significantly dependent on the imports of wheat from Ukraine and the Russian Federation.
While wheat is an important staple in North Africa, it is not necessarily an important foodstuff in sub-Saharan Africa, with some exceptions, although the food price import bill has increased because there are also inputs for feedstocks. Also the oilseeds have increased significantly the level of the food-importing bills of these countries. Despite this, there are food crisis countries represented here, which are also partly dependent on the imports from these two countries. Countries which are in emergency today were also import dependent on these countries.
Maize exports from Argentina, the U.S.A. and South Africa were forecasted to increase. Overall, the level of gap that we have today is around eight million metric tons. Maize export prices surged in March to their highest level on record in response to the abrupt suspension of exports from Ukraine, and maize prices fell a little bit later in April, but very slightly, keeping to the highest levels that we have to date. Of course, in global oilseeds, Ukraine and the Russian Federation export around 63% of global oilseeds, putting significant pressure also on India's market.
One very important topic is fertilizer prices, which have also increased significantly, and fertilizer affordability has decreased significantly. This is a reflection of the increase in gas prices and also of the export restrictions by the Russian Federation, which is the first exporter in the world of nitrogen, the third of phosphorous and the second of potassium. Key cereal and high-value commodity exporting countries like Brazil, Argentina, Bangladesh for rice, and others are import dependent on fertilizers from the Russian Federation, with levels that vary between 70% to 20%.
Moreover, the primary challenge for Canadian and U.S. farmers is the price of fertilizers. Soaring natural gas prices have pushed up the cost of nitrogen-based fertilizers, such as ammonia, which jumped from $700 a metric ton in August 2021 to more than $1,600 in May 2022. The price of potash, rich in potassium, has also also hit records of above $1,100.
What we are observing here is not only putting a challenge on food access but also putting a huge challenge on food availability, which is our major concern for the next year, for 2023. Not only that, but we are seeing levels of export restrictions that are around 17% ,or a little bit more, of all the calories being traded. This creates a significant challenge, in addition to the increase in oil prices and diesel fuel, which have increased substantially, and also in kerosene in many countries in Africa at this point.
All these situations have put us in the position where we need to react quickly to minimize the potential risk that countries are facing. We need to, first, support the ability of Ukraine to farm, harvest and export. We need to provide humanitarian assistance to the country. We also need to refrain from imposing export restrictions and recommit to AMIS, so that we have more transparency. We need to ensure that any measures taken to address the crisis do not exacerbate food insecurity but, on the contrary, increase resilience. Finally, we need to actively identify ways to make up for the potential future gaps in global markets and work together to foster sustainable productivity increases where possible to avoid, as I was saying before, a problem with food availability in 2023.
Thank you very much, Mr. Chair.
The food crisis that the previous two witnesses have so adequately and so well described is not new. This is almost a repeat of what happened in 2008 with food prices becoming sky-high, countries putting on export restrictions and millions of people forced into poverty. At that time we saw that infant mortality rose. In order to go to work, people pulled their kids out of school, and there were food-related riots in dozens of countries. This happened 14 years ago. The causes were slightly different. It's happening again now. This should be no surprise, because there are problems with the global food system.
One of the biggest problems is that many developing countries have been relying on food imports instead of building up their own agriculture. An example of this is that across Africa, the average yield of corn is only one to two tonnes per hectare. Compare that with 10 tonnes per hectare in Canada. There are lots of opportunities to increase yields and to increase productivity in developing countries, but the investment has not been there.
One of the reactions to the food crisis in 2008 was that the G7 and other countries agreed to invest billions of dollars in food security in developing countries to address what they referred to as a decades-long lack of investment. Canada doubled its aid for agriculture at that time. Unfortunately, that priority lasted only three years. By 2013 the aid dollars had dropped back down to their precrisis levels. In developing countries, the crop yields remained low, livestock diseases took a toll, and the brightest young people saw their future anywhere except on the farm.
In 2008 the crisis was caused largely by weather factors. This time it's being caused by Russia's invasion of Ukraine, but we're seeing the same thing, this low investment in agriculture.
I want to focus on what Canada can do to help developing countries, because that's what our expertise at the Foodgrains Bank is in. Our goal is to have a world without hunger. Last year we served nearly one million people in 33 countries through a program working with food assistance, nutrition, agriculture and livelihoods.
Your study is asking what the impact of global food insecurity is and what can Canada do. I won't repeat the numbers of people who are hungry—the previous witnesses did that very well—but let me remind you that those numbers are going up every month.
In Ethiopia, the cost of a food basket for a family rose by 64% between 2019 and March of this year. In Kenya, we're seeing that cooking oil has doubled in price. The commodity suppliers we go to used to guarantee their prices for six months. Now they guarantee them for only one or two months, if at all, because prices are so volatile. This means that Canada's aid reaches fewer people than before, even though more people need help.
People are making tough choices. Some are shifting away from protein-rich foods and just focusing on starch—rice and corn—and nothing else. It fills the belly, but family nutrition suffers. People pull their kids out of school. They borrow money at high interest rates. They sell their livestock. These things help in the short term, but they have long-term costs.
I have two recommendations for Canada to deal with this crisis now.
In the short term, Canada needs to increase humanitarian assistance, especially for food. Canada commits money for food assistance through an international treaty called the Food Assistance Convention. Our minimum commitment is the same now as it was nine years ago, even though the drop in the value of the Canadian dollar and the rise in food prices mean that money feeds only half as many people. Canada should bump up food assistance and consider something like pegging our food assistance to the food price index that Mr. Cullen talked about. As food prices rise, we give more.
Second is that, in the long term, Canada should focus more on agriculture and food security in the aid program and on helping developing countries become less dependent on imports. Our own organization, Foodgrains Bank, for decades has worked with tens of thousands of farmers across Africa, most of them with two hectares or less of land. From our own experience, we know that these small-scale farmers can significantly increase production. In fact, most smallholders can expect at least a doubling of yields in only a few years. That's more tons of grain grown in Africa. It's also better livelihoods for poor families, and it's improved climate resilience.
Thank you. I'll end my comments there and await questions.
As it is with Mr. Baker, this study and this war are personal. All four of my grandparents were born in Ukraine. I've been there three times.
Testimony in the earlier panel focused on grains and food and vegetable production from the Kherson, Zaporizhzhia and Melitopol regions. I've visited that area of the world three times and put my hands in the soil. This is very personal for me.
Also, in the interest of transparency, I worked with the Canadian Foodgrains Bank for five years prior to being elected.
Mr. Hagerman, it's good to see you again. I'd like to begin my questioning with you.
You mentioned that Canada has not increased its minimum commitment for food assistance for several years. Can you compare us to other countries in the world? How are other countries responding?
The Food Assistance Convention, as I said, is an international treaty that has about 15 countries signed on to it. Canada is the third-largest contributor. The two biggest ones are the U.S. and the European Union. Both of those countries have made major increases in their commitments over the past several years. They're now giving 30% to 40% more than what they did nine years ago, when the convention began.
Canada's minimum commitment is flat. As I said, that's the minimum commitment. Canada usually gives higher than the commitment, but there's nothing to stop a future government from dropping down to that minimum level.
We're suggesting that Canada should peg its minimum closer to what it's currently giving. It wouldn't actually cost any more money. It's more of a political commitment to say that we recognize this need, and we'll contribute at this level and peg it to the food price index. Then, if food prices go up, Canada's commitment goes up as well, and we can continue to feed just as many people.
As I said, our own program at the Foodgrains Bank has a lot of experience in this. We've dealt mostly with methods called conservation agriculture—any Canadian farmer will know what I'm talking about—with minimum tillage and soil cover and crop rotations.
The principles are the same, whether you're dealing with a thousand hectares or half a hectare. The tools are different, of course. However, using conservation agriculture, we have worked in about a dozen African countries, with close to 100,000 African farmers. We find that it's a knowledge-intensive approach that doesn't require them to purchase a lot more inputs. Once they've learned it, then they can keep practising it year to year.
It often spreads to neighbours—what we call spontaneous adoption. People who were not even in touch with our extension agents are now picking up these techniques and passing them on. Yields increase by an average of two to three times. Sometimes yields increase by five times over a period of only a few years.
Conservation agriculture is one knowledge-based approach. We also have experience with a variety of others, and lots of other organizations have as well, such as agroforestry and associations between crops and livestock. Think about fish as livestock as well, so fish ponds and crops, etc. Intercropping between maize and legumes helps them both. There are a variety of techniques that are knowledge intensive rather than input intensive, which can dramatically increase yields beyond that one or two tonnes per hectare and much higher than that.
There's a significant problem in what we call the food import bill, which is the cost of what you imported before the problem—before the war—and what you import today. There are several dimensions that have substantially increased the food import bill of all these vulnerable countries. One is, of course, the prices, which have increased substantially. The second is the evaluation of the exchange rate, which also increases the cost of the import bill.
We are proposing to the IMF to develop what we call the food import financing facility. Essentially, we calculate the gap in the food import bill, we rank the countries by vulnerabilities and we identify the countries that are a priority because we want to minimize the potential risk of social unrest. For example, for Africa we are talking about $9 billion, which will be the total coverage of 100% of the gap in terms of the food import bill. If you cover 10%, it will be $0.9 billion. If this is a loan, the cost is minimal and basically can be covered with SDRs within the mechanisms that IMF has.
Yes, the food import bill has increased substantially. Just to give you an idea, in the case of Lebanon, the prices have multiplied substantially. The amount of food they import is around 40% less than what they used to import. That shows clearly how something that was supposed to be inelastic became elastic because of the crisis we are facing.
Absolutely, and I can certainly follow up in writing.
There have been a number of actions that have been proposed in this communication. I am assuming your question relates to the help that we're giving to farmers in the EU. That is a support package of $500 million euros, so roughly $750 million Canadian, and it makes use of our crisis reserve.
The idea is to support the European producers who have been most affected by the serious consequences of the war in Ukraine. It allows member states to provide additional financial support to farmers and to address market disturbances that come from both the increase in the input costs and due to the trade restrictions.
We have also accepted more advances of direct payments and triggered an exceptional and temporary derogation to allow the production of crops on fallow lands. Then we have called on member states also to take some measures such as reducing VAT—the equivalent of our HST—on prices of food so that food is, of course, less costly, but that's more for European consumers.
I'll be happy to follow up in writing, of course.
Thank you for the question.
The European Union has done several things, including establishing contacts with Canada.
Currently, the most important thing for us is to facilitate transit and trade. In other words, we simply have to manage these logistical problems and to get the production out of the country. In fact, I think the witnesses in the previous panel have already discussed this.
Also, the European Commission announced in May the establishment of solidarity corridors to help Ukrainian exports. As you heard earlier, one of the things is to get more freight and terminals, and more storage capacity, which would allow goods to be taken out of Ukraine. I could very well pass on this announcement to you.
We also have a section looking at how to improve connectivity between the European Union and Ukraine, because the connections and infrastructure are not equivalent, as was mentioned earlier. This is one of the first things we are doing in the short term.
The international institutions have adopted a very strong policy of denouncing the export restriction measures that have been taken. Other witnesses have also spoken about this. I think we're working very closely with Canada on this and on avoiding further restrictions, obviously. We're working a lot with the G7, with the Food and Agriculture Organization of the United Nations, or FAO, and with the World Trade Organization.
I'll stop there, but if you have any follow-up questions, don't hesitate to ask me.
Ms. Labat, I'd like to start with you.
Our previous panel of witnesses included a Ukrainian member of Parliament and organizations that were in Ukraine. They really gave us an up-close-and-personal view of what's going on in that country. They all said that relieving the port of Odessa was incredibly important, and it was causing a very serious backlog. Their storage capacity is maxed out and that will impact whether they are able to seed and harvest the crop this year.
The EU has I think Romania and Bulgaria, which have coastlines on the Black Sea. I know that Turkey has been considered as possibly a future member of the EU, but it's also of course a member of NATO.
From the EU's perspective on efforts to secure safe passage from Odessa, which would be the most efficient way of relieving the storage crisis in Ukraine, but also of freeing up a lot of that food, can you maybe tell us a little bit about the EU's efforts in that regard, since you are so much closer in the neighbourhood and probably have a perspective that we as Canadian parliamentarians don't.
Actually, the most recent calls have come from the president of Slovakia who has called for safe passages out of the port of Odessa, which could be safeguarded or guaranteed by Turkey or by the UN, as I understand it. So far, our efforts have focused on land passages and, precisely, since the port was blocked, we are trying to facilitate access through those solidarity lanes that I mentioned earlier to help Ukraine export its agricultural goods.
It is very complicated, because of the border crossings and the very long waiting times at the moment. We want to reduce those. We've called on EU market players to help with this crisis with additional vehicles, by setting up matchmaking logistic platforms and by creating one-stop shops in the member states for these solidarity lanes.
We've also asked market players to make additional rail slots available for exports and to try to remove bottlenecks. We've also worked with national customs authorities to accelerate procedures at border crossing points, and we're also trying to make sure that we create additional storage capacity in the EU.
At the moment, it's really an effort at the land borders, as the port of Odessa, as you were saying, is blocked. There are ongoing discussions on how to help. As you know, the EU is not a military power, so at the moment, there are discussions on how to facilitate and how to safeguard, but we're not there yet.
Thanks to all our panellists for being here today. I really appreciate their testimony and expertise.
I think that most of you, in your opening remarks, focused on or talked about supporting a more sustainable and resilient food system in the future, decreasing reliance on imports and supporting smallholder farmers.
Mr. Hagerman, I know you talked about how conservation agriculture can increase yields. You also said, in your opening remarks, that the problems we're experiencing today are not new.
It goes without saying that we need to respond immediately to the pressures the global food supply is under, given Russia's invasion of Ukraine. As we react to this crisis, though, do you share a concern that we may run the risk of further destabilizing our food system in any way?
I'll go to Mr. Hagerman first.
Thank you to all our witnesses. For your context, we have a procedural vote that is going to be happening in about five minutes, so that is what rushed us a little bit at the end. We did get a second round of questions in, and we certainly appreciate your being here.
Ms. Labat, I might not ask a question but for a comment. Mr. Drouin asked for the EU's perspective on some of the programs to support farmers. Fertilizer was mentioned. I don't have the time to ask it of you, and these things don't happen overnight, but Canada is one of the largest, if not the largest, fertilizer producer in the world. What member states would particularly benefit from Canadian exportation in this domain? If that's something you could provide in writing, we would welcome that.
Otherwise, we will let you enjoy your day, and we sincerely thank you for your contribution to our study.
Colleagues, I have two quick pieces of business. One is the committee budget. Would someone please move that the budget be accepted? It was distributed, and I don't foresee our having any issue with that.