Pedro Miguel locks along the Panama Canal. Photo: Gonzalo Azumendi via Getty Images.
6. Conclusions and Recommendations
Below we outline key conclusions from our analysis and propose five priority areas for action at national and international level to manage chokepoint risk to food security.
6.1 Key conclusions
6.1.1 Trade chokepoints are of increasing systemic importance to global food security
Maritime chokepoints will become increasingly integral to meeting global food supply as population growth, shifting dietary preferences, bioenergy expansion and slowing improvements in crop yields drive up demand for imported grain. Climate change will further widen the gap between food surpluses in centres of supply and deficits in centres of demand, spurring the movement of larger volumes of food around the world. At the same time, loss of soil fertility and more intense cultivation of cropland will likely heighten reliance among producers around the world on internationally traded fertilizers.
On current trends, dependence on key infrastructure in crop-exporting regions and on the maritime chokepoints that punctuate international shipping lanes will continue to rise
Increasing interconnections between producers in South America and consumer markets in Asia – and particularly China – are exerting pressure on the capacity of the Panama Canal and Strait of Malacca. Meanwhile, the Black Sea’s rapidly growing importance as a supplier of wheat to the MENA region and Asia is driving up demand for capacity on railways and ports in Russia and Ukraine, and in the Turkish Straits.
Technological disruptions that radically alter food production methods and patterns of demand could significantly reduce systemic reliance on today’s trade chokepoints, but are hard to predict. The potential opening of new sea lanes in the Arctic due to climate change is unlikely to relieve pressure on existing shipping routes before the second half of the century. On current trends, dependence on key infrastructure in crop-exporting regions and on the maritime chokepoints that punctuate international shipping lanes will continue to rise.
6.1.2 Chokepoint risk to food security is increasing
Rising trade volumes, increasing dependence on imports among food-deficit countries, underinvestment, weak governance, climate change and emerging disruptive hazards together make chokepoint disruptions – both small-scale and large-scale – increasingly likely.
While the Panama Canal and Suez Canal should prove relatively resilient to rising trade volumes, maritime straits and coastal and inland chokepoints are likely to feel the strain of greater transit numbers and larger vessels. More intense activity will exacerbate the impacts of any failures or blockages, and could well drive up the number of such incidents if resources to boost capacity and resilience are lacking.
Climate change will have a compounding effect on chokepoint risk, increasing the probability of both isolated and multiple, concurrent weather-induced disturbances. Higher atmospheric and ocean temperatures will compound the risk of drought, heatwaves and tropical cyclones, while rising sea levels will bring more frequent and damaging storm surges. Direct and indirect climate impacts will constrain the responsiveness and coping capacity of import-dependent countries, heightening their vulnerability to chokepoint disruption.
Political and security hazards also look likely to become more severe. Several trade chokepoints of global importance are located in regions where intra- or interstate tensions are escalating. These include the Suez Canal, the straits of Bab al-Mandab and Hormuz, the Turkish Straits, the Black Sea ports and the Strait of Malacca. Climate migration and conflicts over land and water are likely to become increasingly common in a resource-stressed world.
6.1.3 Robust risk management policies and initiatives are urgently needed
Food security assessments continue to focus primarily on national conditions, overlooking risks higher up the supply chain. Analysis of the risks arising from increasing market interconnectedness and growing reliance on trade is in its infancy. More data are needed on country-level reliance on trade chokepoints, and on the capacity and risk exposure of critical trade infrastructure.
More data are needed on country-level reliance on trade chokepoints, and on the capacity and risk exposure of critical trade infrastructure
While chokepoint interruptions threaten to exacerbate price rises and hinder the delivery of grain and fertilizer supply under both normal and emergency conditions, no international provisions are in place to protect the movement of critical food shipments or to coordinate the international response in the case of a high-impact supply disruption.
Investment in infrastructure lags demand growth: critical networks in major crop-producing regions are weak and ageing, and extra capacity is urgently needed. Insufficient investment is not only an issue for low-income countries. Fiscal constraints, bureaucratic inefficiencies and the vagaries of national politics have propagated infrastructural deficiencies of systemic consequence in the US, Brazil and the Black Sea exporters. Additionally, in the case of Russia and Ukraine, armed conflict has contributed to these deficiencies.
6.2 Recommendations
Managing chokepoint risk will require a range of interventions to build the resilience of trade chokepoints and chokepoint-dependent communities, reduce vulnerability to chokepoint disruption, and prepare for the impacts of interruption. The nature of necessary interventions will differ across geographies and national settings: for some, chokepoint risk may best be mitigated through investment in alternative supply lines; for others, dependence on a particular chokepoint may be unavoidable, in which case preparing for future shocks and reducing vulnerability at national and household level becomes the priority.
The report makes the following recommendations:
6.2.1 Integrate chokepoint analysis into mainstream risk management and security planning
Critical food security corridors could be identified by the United Nations. Whether under the auspices of UNCLOS, UN-Oceans or the WFP, this designation could help facilitate memoranda of understanding (MoUs) between the littoral states of globally important maritime chokepoints to protect critical food security corridors as far as possible, prioritizing food aid shipments in the event of a natural or man-made disruption. Under such MoUs, heads of state would commit to granting all food-carrying vessels passage through contested waters, allowing such ships to be escorted by WFP vessels, and prioritizing food aid shipments during the recovery period.
Government agencies should assess exposure and vulnerability to chokepoint risk at the national and subnational levels – working with international organizations such as the World Bank and UN Food and Agriculture Organization (FAO), and with donor agencies where appropriate. These assessments should aim to address the following questions:
- What is the reliance on imports via trade chokepoints to meet domestic demand?
- Are alternative supply sources available? If so, are these also reliant on trade chokepoints?
- How exposed are the relevant chokepoints to disruptive hazards?
- What, if any, contingency plans are in place to assist vulnerable segments of the national population in the event of a sudden supply disruption?
Donors could work with national governments to develop and fund infrastructural disaster resilience strategies to address the risk of disruption to national and global food supply chains. Such plans should involve the full range of stakeholders likely to be either directly affected by the event or directly involved in the response, and should identify roles and responsibilities to ensure effective coordination.316 These could be tested through simulation exercises, to deepen understanding of practical and political challenges. They could consider how critical shipments of goods and commodities – including, though not necessarily limited to, food – would be prioritized in the event of a major disruption to supply.
National governments with expertise in mitigating or responding to disruptions should aim to share this knowledge with risk owners. For example, response and recovery procedures developed in the US following the devastation of Hurricane Katrina could form the basis of an international working group. Such a group would bring together US coastal authorities and emergency services, and their counterparts from other climate-vulnerable coastal hubs, to support and inform the development of national and site-specific contingency strategies.
Chokepoint reliance should be incorporated in comparative risk assessments and indicators of food insecurity by organizations that provide these services – such as the FAO,317 the World Bank,318 FEWS NET,319 the Economist Intelligence Unit320 and Maplecroft.321
6.2.2 Invest in infrastructure to ensure future food security
An international taskforce on climate-compatible infrastructure should be established under the G20, building on the work of the Global Infrastructure Hub and the Task Force on Climate-related Financial Disclosures (Financial Stability Board).322 It would seek to promote coordinated fiscal stimulus policies, as a means to close the infrastructure financing gap while boosting the impact of such policies on economic growth and reducing the risk of adverse market sentiment.323 More specifically, the taskforce would:
- Develop common principles for low-carbon, climate-resilient infrastructure policies;
- Agree guidelines and standards to inform infrastructure decisions at the planning, financing and construction phases of infrastructure development;
- Make recommendations for how these common principles, guidelines and standards can be entrenched in mainstream policy through, for example, harmonization of multilateral development bank approaches, new voluntary standards and national regulations;
- Examine the risks to the financial system from climate-related critical infrastructure failure and make recommendations for how these risks should be evaluated and managed;
- Quantify the global public services provided by major national critical infrastructure assets and develop recommendations for the mobilization of multinational funding or bilateral partnerships to invest in their resilience; and
- Advise on priority areas for multilateral development bank funding and private investment in existing chokepoints, secondary and tertiary trade hubs, and transport routes.
Independent infrastructure committees should be established at national level to advise on investment and policy decisions relating to major transport infrastructure. These committees would ideally cut across ministerial siloes and operate outside of parliamentary cycles. Their remit could be to assess and respond to long-term risks to infrastructural resilience. Following the example of the Committee on Climate Change in the UK, national governments should act on the recommendations of these committees or offer a full explanation as to why they do not plan to do so.
Investments by multilateral development banks in food-deficit countries should prioritize projects that diversify food supply sources, whether through the establishment of regional trans-shipment hubs, the development of regional strategic reserves, or investment in intermodal domestic transport networks. These plans should aim to improve connectivity and market access across sectors, including in food trade, both to compensate for the high sunk costs of major infrastructural developments and to avoid a proliferation of single-purpose ‘enclave’ projects.324
In countries where state-owned infrastructure is failing – including Russia, Ukraine and the US – governments should consider introducing a ‘landlord’ model of public ownership and private concessions. To ensure that infrastructure serves the wider public interest, these models should include requirements for multisectoral usage and rural–urban market connectivity. They should establish emergency response procedures for high-impact disruptions, during which strategic decision-making on usage and cargo prioritization would be temporarily transferred back to the government. A multi-decade timeline may be needed to ensure that long-term resilience needs are balanced against cost effectiveness and shorter-term returns.
Strategic investment partnerships between exporting countries and key trading partners with the requisite financial capacity could help to support infrastructure expansion and modernization, and contain maintenance costs. Food-deficit countries such as the GCC member states and Singapore, for example, are already investing in agricultural production and export facilities overseas, but are currently focusing their efforts on relatively high-risk regions. An informal partnership between these states and major producers such as the US or Brazil would provide additional security of supply for importing countries, while supporting much-needed investment in infrastructure resilience in the producer countries.
Strategic investment partnerships between exporting countries and key trading partners could help to support infrastructure expansion and modernization, and contain maintenance costs
Continued investment in agricultural extension services, research and development, and the cultivation and scaling up of alternative crops is needed to support a diversified grain production base (particularly in grains with a relatively high tolerance to climate stresses). International financial institutions and donor governments should offer financial incentives to businesses interested in investing in inland infrastructure in high-risk regions or marginal crops, particularly across the Black Sea producers and emerging producers in South America, sub-Saharan Africa and Southeast Asia.
6.2.3 Enhance confidence and predictability in global trade
A process to continually reduce the scope for export restrictions under the World Trade Organization (WTO) should be explored. The ability of governments to impose trade restrictions unilaterally and without warning increases the risk of contagious protectionism, as happened in 2008. Ideally, there would be an outright ban on export restrictions. Less ambitiously, WTO provisions relating to agricultural export restrictions could be clarified and strengthened in order to reduce the scope for ad hoc measures. In practice, making even small steps in the WTO in this area will be extremely challenging.
Reform of trade-distorting farm support in developed crop-exporting countries remains a priority. Current levels of support promote production of mega-crops at the expense of diversifying calorie production. In the context of climate change, a better use of public funds would be to support investment in overseas producers where crops other than maize, wheat, rice and soybean are grown, and/or in countries where agricultural expansion and intensification are possible but where food insecurity persists. Instead of subsidizing domestic farming, developed countries should prioritize investment in production, storage and transport capacity in sub-Saharan Africa, where cereal demand growth is expected to triple by 2050 but where yield gaps remain, supply chain losses are high and market integration is low.325
6.2.4 Develop emergency supply-sharing arrangements and smarter strategic storage
The FAO, WFP or AMIS should establish an emergency response mechanism among major players in the global food trade, modelled in part on that of the International Energy Agency in oil markets. Under such a mechanism, major strategic stockholding countries could establish data-sharing arrangements and agree rules for coordination during acute market disruptions. These arrangements and rules would govern, for example, the release and sharing of stocks and measures to relieve demand, such as the relaxation of biofuel mandates. This club of countries could undertake regular exercises to explore how they would coordinate in different worst-case scenarios.
Collaborative storage arrangements could be pursued along at-risk maritime trade routes, such as the ‘critical food security corridors’ that we propose might be designated by the UN. For example, security of supply between the Black Sea and MENA regions could be enhanced by exporting countries entering into extra-territorial storage agreements with Arab importers, so that a certain amount of Black Sea grain was stored in the MENA region. Such agreements would need to cover emergency access rights and pricing arrangements.
Governments should coordinate storage and agree emergency sharing provisions at regional level to reduce collective vulnerability. Strategic stocks should be secure but accessible to vulnerable population centres; a diversity of locations would reduce the risk of chokepoint disruptions impairing the ability of governments to build up or draw down stocks. Existing frameworks for transnational cooperation on infrastructure development and existing regional grain trade networks provide ample scope for the agreement of regional storage strategies.
Higher stock levels are needed to provide increased assurance against interruptions of supply in vulnerable countries. This is particularly urgent in countries in the Horn of Africa and the Middle East that rely on one or several critical or at-risk chokepoints. Where government capacity and competency to manage stocks efficiently are limited, public–private partnerships should be pursued in which stockholding at target levels is outsourced to the private sector. Adapting arrangements in the petroleum sector, it may be possible for governments in vulnerable countries to lease silos to the private sector, while reserving priority access rights in the event of a supply shortfall. Agreements would need to cover minimum stock levels, the conditions under which normal commercial operations are ceased, and the terms under which stocks are transferred to the host government.
6.2.5 Build the evidence base around chokepoint risk
Strengthening the evidence base around the importance of trade chokepoints to food security, and enhancing understanding of the nature and severity of disruptive hazards, remain key first steps in the translation of chokepoint analysis into policy. Greater transparency and information-sharing around infrastructural resilience and capacity, risk exposure and risk management will also be important for the identification of vulnerability hotspots.
Data on real-time food trade would provide a powerful means of assessing risks to food supply chains, both for staple crops and fertilizers and for food and non-food commodities more broadly. Such a system would need to connect data on individual food shipments with assumptions about routes (for example, generated from AIS data). The data system could also be connected to existing transport network models able to explore rerouting options in the case of a major disruption to port infrastructure,326 in turn facilitating scenario development and crisis simulation exercises.
The scope of AMIS’s monitoring should be broadened to cover systemic chokepoints. It should include assessment of potential disruption risks, and data on performance such as throughput and congestion. Currently AMIS supports market stability by monitoring leading indicators of price volatility – providing an early-warning function – and increasing transparency of market data. Broadening its role to include appraisal and monitoring of the systemic importance of global food chokepoints, along the lines of the US Energy Information Administration’s analysis of oil trade chokepoints,327 would help to raise awareness of chokepoint-related risks.
Ongoing monitoring is needed to plan for congestion and failures, and identify investment priorities. A number of agencies – for example, the OECD’s International Transport Forum (ITF) – are already tracking investments in infrastructure. Others, including the World Bank and World Economic Forum, are undertaking comparative infrastructure assessments. These agencies could widen their remit to include the collation and analysis of national-level data on infrastructure capacity, usage, maintenance and hazard exposure.
Harmonization of nationally reported, macro-level transport infrastructure and asset data, and tracking of spending and performance in the sector (as recommended by the ITF itself in a 2013 report),328 would further boost the value and usability of monitoring. As it may be difficult to persuade national governments to disclose such information, the reporting framework would need to be designed and managed in such a way as to inform and attract multilateral and private-sector financiers.329 AMIS offers a strong institutional foundation upon which to promote data-sharing of this kind.
Industry-led dialogues could help bridge the gap between climate impact modelling and infrastructure resilience planning. Although climate impact models are increasingly sophisticated, it is often difficult to provide information at the level of resolution required for infrastructure planning. Dialogues between, on the one hand, pioneering companies and infrastructure industry associations – such as the World Association for Waterborne Transport Infrastructure (PIANC) – and, on the other, climate model ‘downscaling’ initiatives – for example, the Coordinated Regional Climate Downscaling Experiment (CORDEX) – could help to bridge this gap. These dialogues could enhance communications around the needs and constraints of infrastructure operators and developers, and respond to advances in the climate modelling community. Non-governmental groups engaged in climate-resilient development could also be involved.
Research councils and other funders should establish multidisciplinary research frameworks. These would seek to encourage researchers in the fields of food security, transport networks, disaster resilience, infrastructure development and governance, risk assessment and climate science to address key knowledge gaps, most urgently in at-risk food-importing regions and climate-exposed food supply hubs such as the Black Sea, South Asia and Southeast Asia. Additional research is needed into the dynamics of trade and the likely impacts of a chokepoint disruption in relation to dry bulk freight, as the majority of existing analysis is focused on container freight.
6.3 Concluding remarks
International trade underpins global food security. Trade has facilitated specialization, reducing food prices and maximizing productivity, and producers have invested in response to market signals, raising output so that agriculture has kept pace with demand. Despite an explosion in global population, access to food has improved around the world.
Climate change will have a multiplying effect on security and political hazards affecting the infrastructural backbone of international trade
The food system is nevertheless coming under increasing strain. While market forces have largely adjusted adequately until now, the capacity of international trade to correct for supply disruptions in a climate-changed world is less certain. Climate change will suppress growth in crop yields and make harvests more variable. It will threaten the reliability and integrity of the infrastructure on which international trade depends. In addition to more regular and more severe weather-induced damage to roads, railways, ports and inland waterways, climate change will have a multiplying effect on security and political hazards affecting the infrastructural backbone of international trade.
By virtue of their geopolitical importance and often climate-vulnerable locations, the global food trade chokepoints discussed in this report are likely vectors – and potential epicentres – of systemic disruption. In an increasingly unpredictable world, ensuring the resilience of populations and critical infrastructure to compound and cascading supply chain disruptions, and to ‘black swan’ events, will become increasingly vital yet ever more challenging. Without significant investment in new approaches to risk assessment and management, in infrastructural resilience and capacity, in strong governance and cooperation, and in the diversification of supply sources and routes, food trade chokepoints will pose a material and growing risk to systemic stability and to human security, chiefly in the world’s most food-insecure and politically volatile regions.
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317 FAO (2015), The State of Food Insecurity in the World, http://www.fao.org/3/a-i4646e.pdf (accessed 28 Apr. 2017).
318 World Bank (undated), Databank, ‘Agricultural & Rural Development’, http://data.worldbank.org/topic/agriculture-and-rural-development?view=chart and ‘Health’, http://data.worldbank.org/topic/health?view=chart (accessed 28 Apr. 2017).
319 FEWS NET, https://www.fews.net (accessed 18 Jun. 2017).
320 Economist Intelligence Unit (undated), ‘Global Food Security Index’, http://foodsecurityindex.eiu.com (accessed 28 Apr. 2017).
321 Verisk Maplecroft (2010), ‘Latest product news: Risk calculators and dashboards’, https://www.maplecroft.com/about/news/food-security.html (accessed 28 Apr. 2017).
322 Financial Stability Board’s Task Force on Climate-related Financial Disclosures (2016), Recommendations of the Task Force on Climate-related Financial Disclosures; and (2016), Annex: Implementing the Recommendations of the TCFD, https://www.fsb-tcfd.org/publications (accessed 24 Apr. 2017).
323 Pickford, S. (2016), Global Risks and the Challenges for G20 Coordination: A Growth Agenda for China’s 2016 Presidency, Research Paper, London: Royal Institute of International Affairs, https://www.chathamhouse.org/publication/global-risks-and-challenges-g20-coordination-growth-agenda-chinas-2016-presidency (accessed 28 Apr. 2017).
324 Ramdoo, I. (2015), Synergising and Optimising Mineral Infrastructure in Regional Development Strategies, International Centre for Trade and Sustainable Development, http://e15initiative.org/wp-content/uploads/2015/09/E15-Extractive-Industries-Ramdoo2-FINAL-1.pdf (accessed 28 Apr. 2017).
325 van Ittersum, M. K., van Bussel, L. G. J., Wolf, J., Grassini, P., van Wart, J., Guilpart, N., Claessens, L., de Groot, H., Wiebe, K., Mason-D’Croz, D., Yang, H., Boogaard, H., van Oort, P. A. J., van Loon, M. P., Saito, K., Adimo, O., Adjei-Nsiah, S., Agali, A., Bala, A., Chikowo, R., Kaizzi, K., Kouressy, M., Makoi, J. H. J. R., Ouattara, K., Tesfaye, K. and Cassman, K. G. (2016), ‘Can sub-Saharan Africa feed itself?’, PNAS, 113(52): 14964–14969, doi: 10.1073/pnas.1610359113 (accessed 26 Apr. 2017); Brenton, P., Portugal-Perez, A. and Regolo, J. (2016), Food Prices, Road Infrastructure, and Market Integration in Central and Eastern Africa, World Bank Policy Research Working Paper No. 7003, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2480196 (accessed 26 Apr. 2017).
326 For example, Martagan, T. G., Eksiouglu, B., Eksiouglu, S. D. and Grenwood, A. G. (2010), ‘A Simulation Model of Port Operations during Crisis Conditions’, IEEE Xplore, doi: 10.1109/WSC.2009.5429245 (accessed 20 Apr. 2017).
327 US Energy Information Administration (2014), ‘World oil transit chokepoints’, https://www.eia.gov/beta/international/regions-topics.cfm?RegionTopicID=WOTC (accessed 2 May 2017).
328 OECD/ITF (2013), Understanding the Value of Transport Infrastructure: Guidelines for macro-level measurement of spending and assets, International Transport Forum, Task Force on Measuring Transport Infrastructure Spending and Assets, https://www.itf-oecd.org/sites/default/files/docs/13value.pdf (accessed 28 Apr. 2017).
329 Ibid.