G7 Meeting of Foreign Ministers
24 June 2022
Madame Chair,
Ministers,
Excellencies,
We just saw the video by Secretary General Guterres and Chancellor Scholtz highlighting the urgent messages of our Global Crisis Response Group. Time is short, so let me just emphasize two key problems and two proposals.
First, the cost-of-living crisis is getting worse due to two interrelated factors:
One, the trade system disruption with high costs of transport and logistics due to the pandemic and the war in Ukraine.
Two, the severe price shock and volatility in food, fertilizers and energy that are a very high proportion of the inflation indexes.
We have enough of everything but at the wrong place, the wrong time, and the wrong price. Today, for example, the problem is not that there is a shortage of food – the problem is that the food we do have is locked in a silo or in a country that is too far from the shipping lane or queuing up in a port that is congested and over scheduled.
Trade is a complex system, and it is disrupted. An UNCTAD report shows that between February and May of this year, grain transport costs increased by nearly 60 per cent representing almost half of the grain price increases in the period. Half.
If we don’t ease price pressures in food and fertilizers, today’s food affordability crisis will become a real food shortage and a catastrophe in 2023 with terrible humanitarian consequences that we need to avoid.
The only way to break this vicious cycle and bring prices down is to as the UNSG said: “reintegrating food produced in Ukraine as well as speed food and fertilizers produced in the Russian Federation into global markets despite the war”.
Second, we need to help countries help their poor and vulnerable women and children on famine and malnutrition. Developing countries need much more liquidity. Balance of payment are suffering, interest rates have risen steeply, currencies are depreciating, pressing food prices even further and external borrowing costs are increasing at a concerning pace.
The crisis is already forcing countries and families into impossible decisions. Choosing perhaps to skip a meal or take the children out of school, subsidize fertilizers for farmers or support social protection for families.
To break the cycle, I want to highlight the need to seriously talk about debt restructuring and relief, and to seriously consider making available the fast emergency windows and a new emission of Special Drawing Rights at the IMF – there is no better option of the scale and speed needed, while not adding to debt levels or implying a fiscal effort from your countries. The G7 is key at the Boards of the Bretton Woods Institutions – it is time to mobilize them.
The first five months of 2022 have witnessed an almost 14% increase in recorded protests since 2018. It is our responsibility to pay attention to this worrying trend. I know what it is to be in government in a time of crisis. But I have learnt that even in the most difficult times, we can always make good decisions to accelerate food system transformation and to deployment of renewable energy, decisions that consider the future and support people. It is often hard to find them, but it is our duty to never stop looking for them.
Thank you very much.
