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00:00GUEST. IT SEEMS IT IS NOT NECESSARILY THEIR PRODUCTION THAT IS THE ISSUE RIGHT NOW, IT ' S SENDING THE FOOD SUPPLY WHERE THEY NEED TO GO. WHAT ARE THE BIGGEST CHALLENGES RIGHT NOW IN THE BIGGEST PARTS OF THE REGION THAT WILL BE AFFECTED? > > WE HAD A NUMBER OF LOGISTICAL CHALLENGES PRIOR TO THE OUTBREAK OF HOSTILITIES BETWEEN RUSSIA AND UKRAINE. PRICES WERE ALREADY IT ' LL -- ELEVATED THE NIGHT TOOK OFF IN THE WAR STATE -- THEY TOOK OFF WHEN THE WAR STARTED. THE NEED FOR THE GRAIN IN NORTH AFRICA AND THE MIDDLE EAST IS ACUTE. IF IT ' S OFF THE MARKET FOR MORE THAN A FEW MONTHS OR LESS, WE COULD SEE REAL PROBLEMS. > > WE HAVE ALREADY SEEN GOVERNMENTS TIGHTEN THEIR EXPORTS WHEN IT COMES TO FOOD SUPPLIES DURING THE PANDEMIC. IT SEEMS THIS WEEK ALONE, INDONESIA WANTS TO TIGHTEN THEIR EXPORTS OVER PALM OIL. WITH MORE COUNTRIES RESORTING TO FOOD PROTECTIONISM, HOW MUCH WILL THIS ADD TO THE INFLATIONARY CONCERNS? > > IT ADDS GREATLY TO THE INFLATIONARY CONCERNS. WHEN YOU LOOK AT HOW THE PRICE MECHANISM WORKS, PRICES GO UP AND PEOPLE RATION THEIR CONSUMPTION AS A RESULT. COUNTRIES TRY TO KEEP THEIR PRICES LOW IN THEIR OWN MARKETS BY DIRECTING TRADE BARRIERS LIKE WHAT YOU ' RE TALKING ABOUT. THAT CAN BE SUCCESSFUL LOCALLY, BUT IT CAUSES PRICES TO GO UP EVEN MORE EXTERNALLY. > > ARE THERE ANY ADVANTAGES TO REDUCING THE AMOUNT OF GEOPOLITICAL RISK YOU MIGHT BE EXPOSED TO GIVEN THE PRIME EXAMPLE WE HAVE SEEN PLAY OUT RIGHT NOW? > > VERY MUCH SO. THE PROBLEM HERE IS THAT SO MUCH OF THE GRAIN AND FOOD NEEDS TO TRAVEL SO FAR TO GET TO WHERE IT NEEDS TO GO. IF YOU LOOK AT THE DISTANCES BETWEEN THE ALTERNATE SOURCES OF SUPPLY FOR THE MIDDLE EAST AND NORTH AFRICA, IS A HUGE BUMP GOING FROM THE BLACK SEAT TO AUSTRALIA OR THE UNITED STATES OR SOUTH AMERICA. LOWERING GEOPOLITICAL RISK IS ALWAYS A GOOD IDEA AND IN THIS CASE, YOU ARE SEEING ONE OF THE PROBLEMS OF RELYING ON AN AREA THAT MIGHT HAVE BEEN RISKIER THAN WE THOUGHT IT WAS. > > THEN YOU SEAT MAJOR ECONOMIES LIKE CHINA PRIORITIZING THE ABILITY TO LOOK INWARD FOR THE FOOD SECURITY REGARDLESS OF THE OUTCOME OF THIS PARTICULAR WAR. WHAT IS THE ENDGAME? WHAT DOES THE FUTURE HOLD WHEN IT COMES TO FOOD SECURITY AND BROADER EQUALITY? > > THE BOOM AND RUSSIA -- IN RU SSIAN AND UKRAINIAN AGRICULTURE HAS BEEN THE BIG STORY. PEOPLE HAVE COME TO RELY ON IT AND NOW THAT IT HAS BEEN CUT OFF , ALTHOUGH I HEARD ENCOURAGING NEWS FROM YOU ABOUT CARGO GETTING OUT, TO BE CUT OFF THAT REQUIRES SIGNIFICANT REALIGNMENT OF GLOBAL AGRICULTURAL ACTIVITY. THAT REALIGNMENT WILL BE PAINFUL AND THE PAIN WILL BE DISTRIBUTED IN ORDER OF HOW MUCH YOUR FOOD BUDGET IS RELATIVE TO YOUR OVERALL INCOME OR WEALTH AND THAT GOES FOR COUNTRIES AS WELL AS INDIVIDUALS.

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Gro Intelligence's Mathews on Global Food Prices

Gro Intelligence's Head of Strategy Steve Mathews says that if Russian and Ukrainian grain stay off the market for any significant amount of time, then the world’s next food emergency is here. He speaks on "Bloomberg Daybreak: Asia" with Haidi Stroud-Watts and Shery Ahn. (Source: Bloomberg)

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