Rob Bailey on Global Food Trade Chokepoints and Vulnerabilities

Have you thought about the system of trade that brings food to your market or grocery store? Do you wonder if that system of global food trade, where 25% of all agricultural products are now traded internationally, is a vulnerable or resilient one? Rob Bailey, climate director at Marsh & McLennan, has examined how potential disruptions to trading routes can have severe impacts on global food security.

Rob Bailey lays out the worst case scenario that could lead to a global food catastrophe. And while he paints a terrifying picture, we find that most parts of global food trade stood up remarkably well to the Covid19 pandemic. We discuss this, recommendations to increase resilience in our global food system, and more.

Check out Rob's report: Chokepoints and vulnerabilities of global food trade

For full show notes and transcript, visit: tabledebates.org/podcast-episode2

Transcript

Episode 2: Rob Bailey on Global Food Trade Chokepoints and Vulnerabilities

[Intro music]

Matthew

Debates about the future of food have become more polarized than ever, and little attention is paid to why people hold genuinely different beliefs.

Samara

We are here to fill this gap by exploring the evidence, worldviews and values that people bring to global food system debates.

Matthew

Welcome to Feed, a podcast in conversation with those who are trying to transform the food system. I’m Matthew Kessler,

Samara 

And I'm Samara Brock. And we've been engaging with these issues for years through our work on farms, around policy tables and at universities.

Matthew 00:37

This show is presented by Table, a food systems collaboration between the University of Oxford, Swedish University of Agricultural Sciences, and Wageningen University.

Samara 00:47

So Matthew, what's on the Table today?

Matthew 00:52

Have you thought about where the food at your market or grocery store comes from? Does it come from a farm nearby? Or was it transported from across the world? That depends on many things – like where you live, your socio-economic position, your culture. Also, what season is it? What food product are we talking about? 

All these factors influence what ends up on your plate. But no matter where you live, it's likely that a portion of the food you consume has crossed national borders as one quarter of all agricultural products are now traded internationally. 

Before diving into the question of whether we should be increasingly globalizing or localizing the food system, we want to first better understand how resilient the system of international food trade is that the globalized food system depends on. So we spoke with Rob Bailey, who has examined the vulnerabilities associated with a food system that produces a majority of the word’s staple crops in just a few regions.

Rob Bailey is director of climate resilience at Marsh and McLennan – a global firm helping businesses with risk management and insurance services. Rob has been working on climate change, sustainable development and food system issues for the last 15 years. He began this path while 

Rob 01:39

It started, I guess, when I was working for Oxfam in about 2006. I was working on private sector development issues, a lot of agricultural development. And it was at a time when the impacts of climate change were, you know, starting to become abundantly clear. You could go to, you know, a farm in a developing country. And the farmer would tell you about how the seasons were changing and how it was becoming harder to take decisions about when to plant and harvest your crops. And we started to realize then Oxfam, that actually it wasn't really going to be possible to continue working on development unless we factored climate change into the process and the thinking and the approach.

Matthew 02:31 

Rob continued to work on food and climate issues. During the 2008 global food price crisis, and the falling food price spikes in 2010 and 2011, Rob started to pay more attention to the relationship between global food trade and food security. 

In 2017, Rob Bailey and Laura Wellesley at Chatham House wrote a report called choke points and vulnerabilities in global food trade that examined how potential disruptions to trading routes can have severe impacts on global hunger. They combined trade data and modeled commodity flows to analyze and identify 14 critical choke points around major breadbasket regions. And if you're wondering, what is a choke point? What is a breadbasket region? Don't worry, we've got you covered. We talked about this first before diving into the findings of the report. So, what is a choke point?

Rob 03:15

By a choke point I'm talking about a critical juncture on a transport route through which exceptional volumes of trade paths and you know, the idea for this analysis really came from working on the energy system where you know, energy analysis, analysts obsess about the security of supply of oil and gas through critical choke points. So, the one that we hear a lot about is the Strait of Hormuz in the Gulf, where something like 30% of oil exports pass through there every year. And, you know, every now and again, there, there are Flashpoint tensions there Iran sort of periodically threatens to close it down. And so, you know, that that particular narrow waterway has a huge bearing on the stability of international energy markets. And it occurred to us that that may be the food trading system was vulnerable to similar choke points. So, we wanted to kind of understand really how dependent agricultural trade was on critical junctures be they maritime straits, like Hormuz or particular sort of infrastructural nodes like key ports or inland transport infrastructure, railways, waterways, which are moving a lot of grains and cereals from farmlands to trading points. If a choke point is disrupted, then you can expect quite serious destabilization in international markets.

Matthew 04:57

And how about a breadbasket region?

Rob 04:59

So, these are areas around the world which produce a very significant amount of the food that is traded and consumed globally. So, places like the US Midwest, or the Black Sea region, or the Southern Cone of South America and Brazil around the

Matthew 05:16

And to give you a sense of how much food is produced in these areas, I'll share some statistics that genuinely shocked me. One fifth of global wheat exports passed through the Turkish straits that is grown from the Black Sea region, one quarter of global soybean exports transit through the Strait of Malacca, between the Malay Peninsula and the Indonesian island of Sumatra. This is mostly used for animal feed in China and Southeast Asia. And if you take collectively the inland and coastal choke points in the US, Brazil, and the Black Sea, these account for over half of global exports of wheat, rice, maize, and soybean. I asked Rob, which countries are most vulnerable to disruptions to these choke points?

Rob 05:56

The countries that are most vulnerable to, you know, depends on international food markets for their food security needs. So, they're import dependent. And they're also countries that are poor and have high levels of food insecurity within their borders. And so you know, people talk about low income food deficit countries. And, you know, when you look at this group of countries, you see that there are vulnerabilities within that. So you particularly in the Horn of Africa, you know, this is a region of the world, which faces a lot of problems with drought and insecurity. Given its location, it's quite proximate to a number of critical maritime choke points, right. So you know, you've got Suez Canal, Bab-el-Mandeb, a lot of food imports into the Horn of Africa region need to pass through those choke points.

Matthew 06:45

That's a part I'd really like to explore a little bit more. When we think about a global food catastrophe, a lot of us turn to the production side, we think about droughts and floods and diseases leading to crop failures. But what else should we be thinking about that could cause global food system failure?

Rob 07:07

If I go back to the origins of Oxfam, where I started working on these issues, Oxfam actually came into existence in response to the Allied blockade of Greece during the Second World War, which caused a famine. And you know, recently we have seen concerns about the food insecurity impacts of blockade around Yemen. another country that's been suffering from conflict recently, so whenever there are periods of conflict and instability, there's always the risk of food supplies becoming disrupted, 

Matthew

In the report, Rob breaks down the threats to chokepoints from several different angles. So he just mentioned the role institutional failures, but there’s also cyberattacks, climate impacts, and extreme climate events.

I asked Rob for some examples of what else can cause disruptions.

Rob

Politics can play a role as I mentioned before the role that government decisions to impose export controls on agricultural sectors can have on food prices, you know, in 2008, were during that food price crisis where international prices have increased, you know, 80, 90, 100%, in the space of several months, there was only a really very small perturbation in that year, in in terms of production, there wasn't a production shock. As such, what happened was, there were one or two kind of minor disruptions in markets, which no normally wouldn't have shown up, and it spooked governments, and they started applying export controls. And suddenly, within a few months, we had something like 40, governments imposing significant export controls on their agricultural sectors and prices went through the roof. You know, these were political decisions, essentially, that led to that crisis at the time. Industrial action can have an impact. You know, we've seen port operations often disrupted by industrial action from port workers. 

Matthew

Here Rob is referring to worker strikes. Two examples mentioned in the report occurred in Brazil in 2015 and 2016. In 2015, truckers carrying soybean exports blockaded major roads in over 100 locations across Brazil’s southern states. They were responding to a rise in diesel prices and new highway tolls. The blockades lasted a week, and this caused a decrease of 70% total soybean exports compared to the previous year in the same month. In 2016 dock workers went on strike at the largest port in South America, demanding an immediate pay raise due to wage trailing far behind inflation. It was only a 12-hour strike, but it caused a substantial disruption to coffee, sugar and soybean exports in peak season.

Rob

You know, very often, they're things which are completely outside of our control, you know, is that the food consuming country, you have very little control over what happens at ports or transport routes or production centers in other parts of the world.

Matthew 09:17

Rob notes that while these chokepoints have had an occasional disruption - which range from very small to significant - they haven’t occurred at the same time. 

I wanted to ask Rob, given these vulnerabilities, if he considered the current system of global food trade to be a resilient one? On one hand, a setback to this highly concentrated system of global food production and distribution has the potential to massively impact food security, but on the other, it is a highly efficient system that can compensate for poor regional harvests, and we can enjoy agricultural products that is grown outside of what the ecosystem we live in can support.

But since I was talking to Rob, I wanted to do a short thought experiment, so I asked him:

Can you describe the perfect storm, the worst-case scenario that could lead to a global food system catastrophe?

Rob 09:51

You know, the international food system is vulnerable, because it is highly dependent upon not just a small number of choke points. But also a small number of breadbasket regions. These areas produce the majority of exports of things like rice and wheat and maize and soybean. You know, if we were to take as sort of a worst case scenario, which could be a kind of a confluence of historical events, right, let's say, for example, that we had, in a given year, a hurricane of comparable strength to Katrina that that barreled into the Gulf Coast and shut down US grain exports. 

Now say that that happens, at the same time, as serious rains in Brazil flooded Brazil's roadways along which the trucks drive every year with all of the soybean exports to the ports. And if those two things happened at the same time, that would take about half of global soybean exports out of international markets. Soybean, of course, is the key crop for producing animal feed and vegetable protein. So that's taking two events that have happened before and just assuming they happen in the same year. Now, if you had on top of that, a heat wave like the one that we had in 2010, that led to a serious reduction in wheat production, then suddenly, you could be looking at an additional sort of 40 odd percent of maize and 18% of wheat exports gone as well. And at this point, you you're into completely unprecedented territory with the size of the supply shock that we will be seeing in international markets. 

And on top of that, you know, you might reasonably expect that if this amount of supply was taken off international markets, we would find governments for example, pursuing perverse policies, which just make matters worse, things like panic buying and hoarding, or slapping export controls on our own agricultural sectors, we saw a lot of this happened in 2008. The only thing that these things serve to do is push up international prices further, and of course, and cause more governments to panic, and you get this vicious cycle of declining confidence, more panic, more export controls, more hoarding higher prices, etc., etc., etc. So that's one example of, of the kind of thing that could plausibly happen, given the dependence of the food system on these bread baskets and choke points.

Matthew 12:51

Given your work at the intersection of climate and food systems, how will climate change be impacting food production in the future?

Rob 12:58

The point with a kind of a scenario like I've just sketched out is that climate change is going to make that kind of thing more likely in the future, right, because a heat wave in the Black Sea, and extreme precipitation events in South America, hurricanes, I mean, climate change isn't thought to be making hurricanes more frequent, but it is known to be making them more severe. These are all things that are going to become bigger problems as we go forwards. Now, there are also killer sort of environmental tipping points within the earth system that climate change may be bringing us close to and if we start to kind of pass these, then we could also expect to see very serious impacts on the global food system.

Matthew 13:42

Are there other particular future scenarios that you worry about?

Rob 13:46

For example, you know, one, one that gets a lot of attention is a potential collapse in the thermohaline circulation, the Gulf Stream, essentially as a result of melting Arctic ice. Now, this isn't something that is expected to happen anytime soon. But if that were to happen, you know, we could see potentially a collapse in European cereal yields of around 30% in a relatively short timeframe. Another one, which is looking increasingly proximate at the moment is Amazon die back, where scientists think that you know, within a few years at current rates of forest loss in the Amazon, we could reach a tipping point with that ecosystem, where we get caught in a vicious circle of drying and forest fires and changing local weather leading to more drawing and more forest fires and it becomes an irreversible forest loss. And if that happens, the weather in Brazil changes which could have very serious implications for agricultural production. Of course, Brazil is one of the major agricultural exporters in the world. So again, that would have a serious implication on international food markets. So, you know, it's, it's pretty scary.

Matthew 16:34

If you feel like that is a lot to digest, you're not alone. Rob later shares some aspects of the global food system to feel more optimistic about. But first, how did we end up here? What is the historical context that led us to this moment?

Rob 16:47

A key place to start is after the Second World War, when there was a big international agenda around, you know, rebuilding and reconstruction and the role of international trade and investment in supporting that. And, you know, we saw, you know, the sort of the origins of the WTO. And the international free trade agenda, then, you know, this isn't a criticism of trade at all. But there was definitely a shift in sort of, in policy around achieving food security, through trade, and capitalizing on comparative advantage in agricultural production. And essentially, you know, what, what governments do when they, when they decide to meet more of their food needs through trade is that they are essentially saying, well, we're reducing the risk to our food security of a bad harvest at home, you know, because if you're, if you're feeding yourself, and you have one bad harvest, that can be a real problem, and where we're getting cheaper food from overseas, because we're buying it from places that have a comparative advantage in producing it. And potentially, as a result of that, we're exposing ourselves to the risks of production shocks in those other places instead of a production shock at home. And but you know, the key thing, the key thing that happened was that as trade opened up, and competition between production sites and grew, we've seen more grew, we've seen more and more production shifting to places with very competitive farming sectors in a pure economic sense.

Matthew 18:26

I want to pause here for a second and acknowledge that this is a complicated history with unequal economic and socio ecological impacts. It's also entangled in complex post World War two international politics, the era of decolonization and the Cold War. Some see the developments of modern farming during this time period as an extraordinary achievement to feed a rapidly increasing an urbanizing population. And others will point to the marginalization of smallholder farmers across the globe and the negative environmental impacts associated with the intensification of the farming system. And we'll be speaking to both groups and people in between throughout the series. But now back to rob. 

Rob 19:18

We've seen trade increasing in food in in absolute terms and as a share of overall production at the global level. And we've seen that production become predicated on a small number of highly calorific high yielding crops which, you know, there's a lot of R&D money goes into breeding particularly, more and more efficient varieties of things like wheat, rice, soybeans, corn, you know, between them, you're looking at well over 50% of global calorie production, throw in a few more commodities, you're at sort of three quarters of calorie production.

And so we're in a situation now where production is concentrated in a handful of very competitive breadbasket regions. And it's also genetically very concentrated among a small number of crops. And this isn't a resilient situation. You know, if you had to think about what is resilient is not having a very significant amount of your production dependent on a small number of regions and a small number of crops. But what it does mean is that we have some of the cheapest food relative to real incomes that we've ever had. That's sort of the history of it. It's, you know, economically, in a in a sort of a cost basis called costs per calories, if you like. It's very efficient. But you know, it does have these potential drawbacks,

Matthew 20:28

And you used the term resilient earlier, can you tell us what you mean by it, I hear a lot of people use it. And sometimes they don't always use it the same way.

Rob 20:36

I mean, what I'm what I'm thinking of in terms of resilience is, you know, the ability to sort of withstand a shock or recover or bounce back quickly from a shock. And you can imagine that, you know, this has slightly different meanings at slightly different scales, you know, so a farm, you might think about a resilient crop as one that can withstand a drought. You know, for a farm, a resilient farmer might be a farmer who has a sufficient economic assets or recourse to insurance and finance that they are able to financially withstand a poor harvest and still invest in crop production the next year, when you get to the level of the trading system, then, you know, you're thinking about the resilience of, you know, international markets to production shocks or supply disruptions and you know, the extent to which that may be translated into a price impact. So, you know, at different points within the food system, resilience can have a slightly different meaning

Matthew 21:39

That historical context and that definition of resilience is a really helpful setup to understand where we are today in the global food system. In the beginning of 2020 we had a real and still ongoing case that is testing the resilience of the global food system with the coronavirus pandemic. How do you think your former assessment fared? Were any new vulnerabilities revealed to the system, in your estimation handle this shock? 

Rob 22:06

Well, it's probably a question of the scale at which you're trying to answer the question. What seems to have happened naturally, is that agricultural trade has remained less affected or more resilient than general trade. So you know, which is a good thing for food security, certainly, because we haven't had an international spike in food prices. And you know, that the reliance on agricultural markets on this small number of sort of industrialized agriculture dependent crops like maize and soybeans and wheat and, you know, maybe in this case, that's been a good thing, because actually farming those crops isn't very labor intensive. It's depends on large, large farms and lots of machinery and whereas at smaller scales, that local scales and then in horticulture, where you have more labor intensive, you know, fruit picking and things like this, there have been problems. I think, often associated not with actually, the farming but with the need for farm workforces to be in close proximity to one another. And, you know, from what I've seen, the bigger problems have been less one of supply and more one of access. Right. So, you know, the Coronavirus, has triggered a huge global economic recession and declines in real incomes and losses of jobs, you know, hundreds of millions of full time equivalent jobs have been lost around the world. And so there are a much greater share of households facing food insecurity, irrespective of what's happening with production than there were before. I think, you know, in the spring, you estimated that the number of people facing acute hunger may double this year as a result of, you know, declines in income as losses of jobs and collapses in in remittances. So that's where I think the real problem has materialized.

Matthew 24:05

This brings us to what do we do about it. We'd like to mitigate risk in the future and build a more resilient food system. So I'll ask if you were minister of the global food system, what steps would you take? Or what steps would you recommend to build a more resilient food system?

Rob 24:24

Well, that's a big question, isn't it? But I should, I should definitely have a go at trying to answer it. You know, from the point of view of resilient trade, which you do want, because you know, there are countries in the world which, you know, no matter how much you invested in local agricultural production, given the levels of poverty and population growth and state of infrastructure and institutions in those countries, they would not be able to fit themselves. You know, trade is necessary.

Matthew 25:15

And there is also amount of arable land available to consider! For more on this complexity, check out the episode with Ken Giller on the Food Security Conundrum where he unpacks these incredibly complex dynamics.

Rob  24:24

I think, global rules that would prevent the unilateral imposition of x board controls would be one thing, right? So we have, you know, we have rules governing tariffs, you know, barriers to imports, essentially. But we don't have rules governing barriers to exports in the same way. So that would be one thing I would look at.

Matthew  25:15

What solutions would you propose to deal with the vulnerabilities to breadbaskets and chokepoints?

Rob 25:17

The key thing that I would want to see more of is diversity in production and consumption. So one of the, you know, I've mentioned how concentrated production is among a small number of regions and the small number of commodities. And that has implications for consumption as well, because we're, you know, so much of our calorie supply comes from such a small number of highly calorie dense crop varieties, we inevitably end up formulating foods depend that depends on you know, wheat, and corn and, you know, high fructose corn syrup and things like that. And there's been research that shown that as we've become more dependent on these crops, global diets have converged around foodstuffs which utilize these in their manufacturer, highly calorie dense foods. And that's associated with increases in obesity and associated non communicable diseases. 

And you know, now we're at a point where health problems associated with overweight and obesity are actually starting to eclipse the problems associated with undernutrition. So this is a sort of a public health crisis in the making, or it's already made, actually, it's just going to get bigger and bigger. But a food system which supported a much more diverse range of crops would solve the problem of concentration of supply, it would probably result in bringing, you know, shifting concentration, shifting production geographically around the world because we would be growing more crops which would be suited to grow being grown in different regions and parts of the world. And it would result in diets which were more diverse and more nutritious.

Matthew 27:07

And what do you think would help incentivize this approach?

Rob 27:10

I think, you know, there's a role for policy both in supporting farmers to diversify their production and employ more resilient farming methods at the level of the farm, which could also result in more diverse landscapes, farm landscapes, which are better for biodiversity as well as for on farm resilience. And that, and I think they're also polis. justification for policies to encourage people to eat more balanced diets, you know, higher share of fresh fruit and vegetables, for example, a broader range of carbohydrates, probably in many developed countries, a bit less meat and dairy. And but all of these things, if they were to happen could result, I think, in a food system that is both more environmentally sustainable producers less in the way of public health costs and is also ultimately more resilient. Thinking about global food system resilience,

Matthew 28:10

The report also lays out some specific recommendations to mitigate chokepoint risk:

Support large investments in infrastructure to major crop-producing regions. This is an issue for low and high-income countries. The US, Brazil and Black sea region, especially, can all benefit from improved infrastructure. Some of this is due to a lack of political will and other times it’s halted because of armed-conflict. 

The report also recommends developing and funding resilient strategies at the national and sub-national level and incorporating chokepoint reliance into risk assessments and as indicators of food insecurity.

You can read the report in more detail linked in the show notes or on our website.

I then asked Rob, what in your opinion, is receiving too much attention and what is being forgotten about?

Rob 28:16

There's often been a tendency to focus exclusively on production as the solution to so sorting out the food system, you know, if we can just grow more food more cheaply, or if we can just grow more food more cheaply at lower environmental cost, then everything will be resolved. And I think that that focus has often been at the expense of a focus on consumption, and demand. And actually, a sustainable and resilient food system is going to be one way in which people are eating sustainable, and diverse diets. And if you can, if you can shift patterns of demand and consumption towards more sustainable and diverse diets, that is often going to be much more impactful and effective than continually trying to focus on the production side of things. Because when one thing that we've seen over the years is that the more and more food that we grow, even if it's happening at less and less cost that's not resulting in a more resilient or sustainable food system. Actually, it's is resulting in lower prices, but it's resulting in more food waste, less balanced diets, and the systemic vulnerabilities. So I think it's time to kind of refocus on the on the demand side and on the question of diets.

Matthew 29:49

I'd like to wrap up with just a final question that we like to ask all our guests what evidence and knowledge base to draw from in your own research and work.

Rob 29:58

You know, the idea for the choke points work came from working on the energy sector. Right and saying that the energy sector was sort of obsessed with choke points and sort of asking myself well, you know, is there is there a similar issue with the food system that we should be looking at, in my current role now working for Marshall McLennan, for me, it's really critical that I have the opportunity to sit down with clients, whether those are clients in, in the financial sector, the corporate sector, or governments, and understand, you know, the challenges, that they're seeing the things that they're worrying about the risks that they see coming down the horizon, because those conversations are really critical for me and understanding, what are the things that we need to be developing ideas around or thought leadership around or digging into more closely. So you know, you mean, it's great, you know, reading, reading documents and reports and, and sort of synthesizing other people's ideas. But if I go back to the start of my career, all of this started really from talking to smallholder farmers in Sub Saharan Africa and understanding the problems that they were facing. And that's why I ended up working on climate change. And I think you know, that lesson holds true. You need to understand the problems that of the people or the clients that you're trying to serve. That's the first thing.

Matthew 31:23

Thank you very much, Rob. For your thoughtful, interesting and sometimes alarming responses. It gives us a lot to think about.

Rob 31:31

My pleasure.

Matthew 31:42

And that's another episode of the Feed podcast presented by Table. Subscribe to us wherever you listen to your podcasts, so you can hear me struggle to pronounce Wageningen, but getting better every time? Please share the podcast with your friends who have food on their mind. And if you like the show, leave us a review on Apple podcast. It really helps others find the show. Who else would you like us to talk to? What food system debates would you like to hear more about? Send us an email to podcast@tabledebates.org You can find a link to Rob Bailey report and more information online at our website, table debates.org where you can search through our research library and explainer pieces on different food sustainability issues. Today's episode was edited next by me Matthew Kessler with special thanks to co Samira Brock and our team at Table music in this episode by blue dot sessions. We'll be back in your feed soon when I speak to Lauren Baker, Director of programs for the Global Alliance for the Future of Food. We talked about or tried to talk about scale and the food system.

Lauren 32:46

We don't talk a lot about scale actually. And I think it's not a great word. And I guess what we're trying to do is kind of connect networks who are working on a more principles-based way. So we were interested in work that illustrates resilience and diversity and equity.

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