The vulnerability of the global food sector is increasing and this trend is expected to continue, largely due to climate change.

Recent months have seen unusual heat waves in some Western European countries (such as France, Spain and Italy), numerous fires in New Mexico - USA, record high temperatures that cause drought in Africa, India, China and many other cases of climate shocks, commented by "Kofas - Bulgaria".

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In the context of the challenges facing the global food sector (including inflationary pressures as a result of the war in Ukraine and multiple diseases such as African swine fever and powdery mildew outbreaks), Cofas predicts possible risks for the sector , which would appear as a consequence of the unusual change in climate.

First of all, these phenomena will have a serious impact on the production and financial risks associated with crop loss for producers.

The World Meteorological Organization (WMO) estimates that natural disasters have caused US$2 trillion in losses worldwide over the past 50 years.

Current risks to the food sector are expected to lead to a contraction in global cereal production in 2022-2023. 

In addition to the various challenges facing the sector (including climate disasters, soaring commodity prices and supply constraints), Cofas notes another important factor contributing to lower global production is a lack of incentives for farmers.

Cereal producing countries such as China are forecast to slightly slow their wheat production (-1.4 percent y-o-y) due to stagnant yields (-0.7 percent y-o-y).

Germany accused Russia of using hunger as a weapon of war

Second, global food security is highly threatened by inflationary pressures and protectionist measures due to shrinking agricultural trade.

This will lead to disruption in global agricultural value chains.

"The contraction in world trade in cereals underlines an inflationary wave and speculative trends. We see a decline in the sector of 2.6 per cent globally for 2022-2023. This is also due to the disruption of supplies from Ukraine, along with the restrictions imposed from Russia. Ukraine's current absence from grain supply chains (and a possible one next season) will lead to a reorientation of suppliers. Russia is likely to try to establish itself as an alternative to Ukrainian grain imports for countries that have not sanctions against her", commented Plamen Dimitrov, manager of "Cofas Bulgaria". 

In addition, the decline in production due to limited use of fertilizers (due to high prices) may have caused some cereal producers to increase the area planted to compensate for yield losses.

This is the so-called

a strategy of extensive farming, but it may have its risks.

Brazil, for example, may be tempted to expand its crops in rainforest areas, which will increase deforestation in the Amazon. 

It remains to be seen whether farmers will switch to organic production with limited fertilizer use, especially in developed economies such as Europe.

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