 And he's the single delegates, participants, and colleagues. Very good morning, good afternoon. I would really make it depending on your time zone. My name is Dominique Gervaux. I'm the Director of the Café of Religion, and I will be directing this session. Let me start by thanking the world for listening the time to attend this session. And I really appreciate your support and interest in what we do. As you may already know, I'm an engineer and I'm organizing a trade that is in value with the market and the market in general position. And I'm going to introduce our objective experience on how to handle a particular group of radical, radical trade and food safety. Before introducing our speaker, I would like to briefly touch upon the topic of food safety. The online trade plays an important role in providing sufficient diversity in food. It also generates income and employment of farmers, workers and traders in the entire agriculture and food industry. Since 1995, the agriculture trade has been more than doubled in volume. Today, more countries trade with each other. The share of production training for agricultural commodities has been also gradually increasing over time. According to the latest OECD FBO, agriculture outlook, following the period of 2023-2032, the share of production training has risen from another 14% to 20% to 23% in the baseline period of 2020-2022. Dominic, excuse me, I interrupt you. Your sound is not very clear. Okay. No, we cannot hear you. Can you hear me better? Yes, it is better right now. Thank you very much. I'm really sorry. Shall I start again? If you don't mind, maybe we can. Okay, very good. Let me do it then. And I apologize to the participants. I was not aware of this problem. So, as I said, good morning and warm welcome to this briefing. And of course, I would like to thank you all for participating and for your interest in this briefing. As you already know, FAO Geneva is organizing trade dialogues in collaboration with the FAO market and trade division. And through this series, our objective is to share information on relevant and timely topics related to agricultural trade and food security. And I would like to say a few words on today's briefing session. As you know, trade plays an important role in providing sufficient, diverse and nutritious food. It also generates incomes and employment for farmers, workers and traders in the entire agricultural and food industry across countries. As a matter of fact, since 1995, food and agricultural trade has doubled in volume and in calories. Today's more countries trade with each other. The share of production traded for agricultural commodities has been also gradually increasing over time. According to the latest OECD FAO Agricultural Outlook, which covers the period 2023-2032, the share of production traded has risen from an average of 15% in 2000 to 23% in the baseline period 2020-2022. Trade is closely linked to food security. Indeed, the 2030 agenda recognizes the key role of trade in addressing food security, nutrition and sustainable agriculture. Food security exists, as you know, when all people at all times have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life. Agricultural trade can help improve food security in its different dimensions. On the other hand, the food security situation in a country or region can also be severely impacted when trade is disrupted. With this background, today's session will focus on the recent shipping disruptions to trade with implication for global food security situation. Before starting, and as usual, I would like to share some details regarding the logistics and housekeeping for this virtual session, which will be held in English with no interpretation. It will be recorded and will be shared with the participants along with the presentation relevant to this session. It is scheduled to last for about 45 minutes. We have reserved sometimes toward the end of the session for questions, and we ask you to submit those questions in the Q&A module. Do not use the chat box that is not activated, so please use the Q&A module. Kindly state your name and organization or institution, and we will try to accommodate as many questions as possible, either in writing or rally during the session. So that's it for our skipping, and let me introduce our speakers today, and we are very pleased to have two eminent colleagues joining from our headquarters in Rome, Mr. Bubakar Ben Bel-Asen, who is the director of FAO Market and Trade Division, whom I'm sure many of you know, and Ms. Monika Totova, who is a senior economist within that FAO Market and Trade Division, and who is also serving as the secretary of the Agricultural Market Information System, which you all know, in short, AMIS. So without taking much time, now I would like to give the floor to Monika for our presentation. Monika, the floor is yours. Welcome. Thank you, Dominique, for the introduction. I hope everybody can hear me loud and clear. Since I'm a bit technologically challenged, Pinar agreed to operate the presentation. So we can go to the first slide, Pinar. Thank you very much. Good afternoon from Rome. Welcome to everyone. I'm particularly delighted to see colleagues from other international organizations, and I hope at the end, they will also, should there be room, participate in the discussion and answer questions based on their analysis. So shipping is an integral part of moving goods, would there be food commodities, spare parts, inputs for industrial production, medicines, et cetera, et cetera, from producers to consumers. As it is often the case, when logistical systems, including shipping, run smoothly, they do not receive much attention. However, they become more evident once there are disruptions on problems that arise. So shipping, considering that by definition, it is impacted by nature and by typhoons, by weather developments, et cetera, et cetera, however, impacts of those natural events are usually very short-lived and rather localized. So if you allow me a few words about the agriculture trade in general, before we delve into the briefing. 80% of the world trade in grains and oil seeds is shipped by the sea. And typically, this is done by drug bulk carriers. Drug bulk carriers are differentiated on their tonnage, deadweight tonnage, and they can transport a variety of cargoes from agricultural commodities, fertilizer, iron and ore, coal, cement, all sorts of things that can be transported in bulk. Thus, the shipments for agricultural commodities are, for lack of better words, competing with the demand from the industrial sector. Most of the listeners will be familiar, familiar with the vocabulary, but in case not, we are using labels like Supermax, Handicize, Panamex, CapeSize to qualify vessels based on their tonnage. All the vessels, of course, are the commissions, new vessels enter the market, and this is usually the size of the availability for the shipping is determined by the demand from non-agriculture sectors. According to the shipping industry reports, there is still excess capacity in the shipping industry right now. Some agricultural commodities, for example, rise tend to be shipped more in the containers. Also, agricultural commodities depend the choice that the bulk or container would also depend on the size of the market. Generally, the smaller markets, also less matured markets, they might be more inclined to import in containers as opposed to dry parts, which also has to do with the port infrastructure. Next slide, please. Pina, we can move to the next slide. I'm having some technical issues. I will move to the next slide in a very bit. All right, thank you. So I will start on the next slide. In the past, we spoke about the stock and the disruptions that come from the shipping from the weather events, for example. But in the past four years or so, we also had a number of shocks that were really not anticipated ahead of time. The first one would be the COVID-19 pandemic. The COVID-19 pandemic increased demand for the consumer goods, increased demand for the medical type of goods, which were imported from Asia to other markets, which increased the demand of shipping for shipping, which coupled with the measures introduced to limit the spread of the virus, led to delays in shipping and increasing shipping costs. Then in 2021, in March, as you can see on the picture on the left side, there was the six-day obstruction of the source canal, which source canal for some part is navigable both ways, but this incident happened in the port, which was only navigable one way. So it led to a complete blockage of all transit with more than 430 vessels blocked in this incident. Each additional day of delay was dying up to additional half percent of the global shipping capacity waiting in the queue in the source canal, considering its importance connecting Asia with Europe. So for shipping lines, this resulted in a time cost for the vessels, loss of revenues and loss of capacity, and sparsing the canal with the delay means that you are going to miss the slot in the port you will be calling next. So there was this whole buildup in the system which then led to significant delays. Another rather recent example was the disruption of the seaborn trains from Ukraine after the Black Sea route from Ukrainian ports was blocked due to the war. So this was the case between February 2022 from February 2022 to July 2022, then following the introduction and implementation of the Black Sea grain initiative, things smoothed out. The concern that they were present following the cessation of the Black Sea grain initiative were somehow mitigated by the restoration or by introduction of a humanitarian corridor that hacks very closely the coastline. Last but not least, and somehow less in the public focus, they have been disruption in several inland waterways to challenge the transportation in the major agriculture exporting countries, including grinding Germany, the Mississippi River in the United States and the Tapayas River in Brazil. The situation in the Mississippi River has improved and the drought advisory is no longer in place. Moving to the next slide, let me now focus on the two main shipping bottlenecks that materialized relatively recently and that would be the Panama Canal and the Red Sea, which facilitates trade of around a fifth of global bulk grain and oil seats. We can move next. So, going to the Panama Canal. Panama Canal restrictions started a little bit earlier since about July 2023, but they were relatively minor and then they progressively worsened towards the end of 2023. The Panama Canal transports about 5% of global maritime trade and the most affected sectors would be petroleum, chemical and non-metallic mineral products. Panama Canal, contrary to popular belief, is not exactly a strength canal. So, in this, quite an engineering feat, covers approximately 80 kilometers between the Atlantic and Pacific oceans and it is a system of locks and these locks with the doors that act as lifts need fresh water to actually work, as you see on the picture on the left-hand side. So, even without the record drought and the country experience in 2003, the population growth means the country means that the demand for the fresh water in 2023 is much higher than it was in 1914 when these locks were being built. So, the water comes from the Gatun Lake in the middle and under normal conditions, the Panama Canal would facilitate transport about 13,000 to 14,000 vessels each year, which translates between the 35 and 38 vessels daily. Next slide, please. So, the water levels resulting from extreme drought and that was also exacerbated by the El Nino event kept the number and the size of the vessels that were passing through these Panama Canal locks. The first reductions were introduced in July 2023. By January 2024, they reached nearly 40% of the volumes of one year ago, leading to extended waiting times and diversions, especially for tangers and dry cargoes. As it turns out, the companies that are, let's say, loyal customers that pass the Panama Canal more often with big cargoes, they can actually book slots, so there is a different treatment slightly because they bring more traffic. The latest revision, which was published last week, now allows for transit of 27 vessels per day, which is still lower. There has been also an auction for the slot, so the fees for passing the canal have actually increased. Next slide, please. Transit, it is an important, the Panama Canal is an important point for the transit of shipments of grain, oil seats from the US Gulf Coast to the destination of Asia, as well as horticulture products originating from Chile, Peru to the US East Coast, and then also to Europe. As I mentioned, container traffic is affected, but relatively less because they can book a slot or they can alternatively unload the cargo. It's not an easy feat, but it can be done to unload the container and pass it through rail, which cannot really be done so easily for dry bulk commodities. So the alternatives in place are you can do a longer journey, you use intermodal transportation, or in case of US, instead of shipping from the Gulf, the goods could be shipped towards Asia, which is a significant market, from the US West Coast. However, constraints include constraints that are imposed by domestic shipping capacity are limiting the use of these alternative options. The chart you see on the left, it affects, it was a simulation done by IMS and it assesses the volume of traffic flow at the risk of being affected by the disruption to shipping in the Panama Canal. So basically you see the vessels or the pawns from which the vessels passing through the Panama Canal either originate or where they are heading. Next slide please. Moving to the Red Sea, you will notice that for Red Sea, I use that disruption while for the Panama Canal, I use the word restriction, right? So in the Panama Canal, what happens is that the Panama Canal authority actually sets up the number of vessels that can pass depending on the availability of the main lake that is feeding the logs. Now the shipping got more expensive and you might need to pay more for the transit, you might need to auction for the spot to pass the Panama Canal, but you are aware of this existing bottleneck and there is a certain degree of transparency and predictability if you wish. In this situation, this is what you are going to pay, this is when you are going to pass, right? What is happening in Red Sea is more of a shipping disruption considering its uncertainty that is associated with it. So since the attacks on commercial vessels in the Red Sea have been taking place in December 2023, this passage secures up to 15% of global money-time trade. The most affected sectors are energy products, mostly crude oil and LPG, and as it was the case in the Panama Canal, chemical and non-metallic mineral products. It is an important shipping route connected, connecting Indian oceans with Mediterranean Sea via Red Sea and the Suez Canal. Next slide, please. So they have been more than 50 attacks since November 2023. The latest information covering the first decade of March indicates that money-time shipping through the Suez Canal has decreased even further in March with the estimated transit volume down over 60% in the first decade compared to the 55% in February. In total, shipping volume equivalent to about 1.5% of 2023 global money-time trade has been diverted away from the Red Sea and this rerouting efficiently begun in mid-December. So what is this 1.5% of the global money-time trade? It is equivalent to about 2,100 vessels carrying an estimated 180 million metric tons of goods, any goods, right? We are not talking specifically about agriculture. In this case, it is any cargo. And you observe it right there on the slide that the number of cores, number of passing through the Barb-Eleman Zep straight and then also some vessels will stay unload in the Red Sea. For example, in the Jeddah airport some will continue towards Suez Canal but the cores have declined in both cases. Next slide please. As the cores decline in the Barb-Eleman Zep and the Suez Canal the cores in the Cape of Good Hope have increased. So several shipping companies responded to the threat of attacks by rerouting money-time traffic, reports anecdotal evidence on beginning to emerge indicating bottlenecks around the route that goes around the Cape of Good Hope since traditionally this route has not been accustomed or more recently it has not been accustomed to increased level of traffic volumes. So if we compare it the traffic volume increased by 108% compared to last year in the Cape of Good Hope in March. We can move to the next slide when we go and talk about the implications. So the events in the Red Sea have only been impacted rather early on the global value change and delayed delivery of components in the just-in-time delivery system which are important for the industrial sector. For agricultural commodities this passage is important to secure the export of grains and oil seeds from the EU, the Russian Federation, Ukraine to Asia and East Africa. Similarly, NICE and other commodities had eastwards from Asia. Fertilizer trade including potash from the Russian Federation to Asia also transit through the Red Sea. NICE tends to be shipped in the containers as I have mentioned. So the shipping according to the calculations that were done early on by the colleagues in the IGC calculated that rerouting grain deliveries bulk grain deliveries from Europe to Asia via Cape of Good Hope adds an estimated 10, 15 days of journey time and about 10 US dollars spent 10 to freight costs. There are extra costs for example LPG tankers that would be carrying liquid ammonia because they post additional risk. There would be extra costs of diversion for perishable products that need to be refrigerated net to be etc. Even if vessels are not rerouted the insurance costs for passing the straight have been reported to have increased although the cost of insurance is often considered not as easy to obtain. The early attacks were directed at the container vessels. Hanana in January 2024 it was a dry bulk carrier then it was an all carrier that was hit and one of the most significant ones was the drag in about mid-February, 18th of February there was a dry bulk carrier which was carrying about 21,000 tons of ammonium for state fuel for fertilizer. The crew eventually escaped on Hanana but the vessel stung on the 2nd of March leaking not only fertilizer but also fuel and heavy oils and you name it whatever is on a vessel. There is concern about environmental disaster and impact on the fishing livelihoods. The environmental implications actually there is more than one there is this direct implication from pollution from the vessels that might be hit in the process or were hit in the direct sea but there is also the impact of the longer shipping route as the longer shipping route might take extra 10-15 days on longer depending on how the situation is going to develop obviously the vessels on traveling, traveling longer journeys and they are using emitting more CO2 emissions but also to make up for the lost time they will go faster and if they are going to go faster they are emitting more per unit than they would have done otherwise. There is also a danger which was up to recently was a theoretical danger of increasing potential for piracy attacks in areas just earlier this week there was a vessel carrying coal which was indeed attacked by pirates so we can move to the next slide I think I have a technical problem again I will do it I don't know what's happening but I apologize for that so what this means what this means is that first think about Egypt while in Panama Panama the Suez Canal the vessels are passing and they might be auctioning for them bidding for how much they pay for the passage Egypt actually is for them the Suez Canal is the main source of currency with a direct macroeconomic impact on its economy the Suez Canal revenue in January was down by 47% which was a loss of almost 350,000 million US dollars there is also a concern while for grains and oil seeds if the shipping using longer route takes longer there are not perishable it's going to cost more to transit it but considering the nature of the product there is not this immediate danger of product going wrong this is not the case on the perishable product and life animals this is the time of the year that the shipments of life animals from for example Australia to near east are going strong in preparation during the Ramadan and preparation for the upcoming heat so New Zealand exports of life ship we see at the end of 2022 but Australia is considering this ban but is still exporting this life ship looking at the trade data this show already now a significant decline in life ship exports already in the last quarter of 2023 campaigning to last quarter of 2022 there was a decline of about 20% in January the trade data we have now indicate only shipments to Malaysia and Indonesia they are similar impacts also on the chilled and frozen meat sectors it also creates issues if you are going to for example deliver the life animals or whatever cargo into ports that are in the red sea but you are not going to cross the Suez Canal so if you were exporting for example meat from Australia to Saudi Arabia and you would unload it on Jeddah it is not quite possible it is possible now if you are going to take the risk so you would unload in Daman in the Persian Gulf and then track the containers to the destination and then again track empty containers back to the to the port of Daman so they can be again put into the system which leads into the delays but it also leads to increased costs traditionally the higher demand during the Ramadan and eat usually pushes the prices even higher so combination of these two factors can lead into additional increases in the food prices also and so far and so far we have not the energy prices have held up they have not been significant changes in the energy prices however we all know that agriculture is a very energy intensive factor you need the fuel for agricultural operations but you also need the energy to produce fertilizer to produce agricultural inputs etc etc could there be another stock that would put the energy prices higher this would have an impact on the agriculture on the prices of agriculture inputs last moving on the Red Sea these disruptions in the Red Sea could impact the competitiveness of different origins which means that for Asian customers for example if they have to pay higher premiums or they have to pay higher shipping costs the destinations from the Black Sea and under European sources origin might not be as attractive and instead they might be increasing their needs from the American continent or even from Australia the first considering the landscape the first concern the impact of this increased cost of shipping the first sort usually goes to Yemen Yemen imports 95% of its food and if they have to pay more for the shipping to get the goods in this will have impact on the country's economy despite the disruption we have not yet observed this decline in the import flows and in January actually compared to the previous two years the volume of the imports that got to the Yemen ports eventually slightly increased by about 10% and then eventually this high cost of right and insurance will put an upward pressure on the prices the next slide we only have two more slides left, thank you so what this is going to mean for the consumer prices depends on a variety of factors depending on a place in several countries higher shipping costs will likely impact food import and subsequently retail prices of course it will depend whether the FOB the export prices whether they can absorb some of the increases in the shipping cost all right now if they can absorb some of the increases in the shipping cost this will mean the producers are going to be paid less and as I will show on the next slide the producer prices or the export prices generally have been declined if producers receive even less for the product which considering that the markets are now relatively well supplied they will when it comes to plant again in the future they will reconsider how much they are going to plant if the prices are lower and this could have could have implication on the production decisions for the future we have already spoken about the transportation what is also there is quite a bit of interest in looking for alternative shipping routes there has been quite an increasing interest in the rail transportation across Eurasia transiting goods from China via Russian Federation right discussions on the in the Middle East Europe which were started in about September last year the ongoing shipping disruptions are adding additional fewer additional impetus to this discussion of creating a land corridor of course those are discussions that are more for the longer run now going to the last slide I just wanted to show you what I have already mentioned before but graphically that the food prices generally the FAO food pricing looks at export prices right so those have been generally declining with the exception of sugar that has been quite volatile but they are underlying supply issues that while the prices of the shipping prices have been increasing so Pinar I will leave it here and I will be looking forward to questions so we have some time left thank you well thank you so much indeed Monika for such a comprehensive presentation providing all the information that is available indeed at your end and a very analytical presentation of the different constraints that global trade is currently facing so I have a question here for you Monika in your presentation you basically touch on a variety of factors and concepts including generally declining FAO food price index and increasing shipping cost and the implication that this may have an impact I mean Geneva here online we have many trade people from WTO missions etc but Geneva is also the world humanitarian capital and therefore when you see that sort of disruption you immediately think that there could be impact in terms of the supply of assistance to over 250 million people who are currently facing acute food insecurity and particular other assistance that is provided by WFP and others could you please elaborate on potential implications on availability of such commodities to be used as food assistance and the implications that we may have for the countries depending on them yes thank you Dominique so there is good news and there is bad news right the global export prices are easing generally speaking so but at the same time the agencies that are involved would it be WFP would it be other agencies are also responsible for the logistical arrangement to move goods that are then used for food assistance from where they are purchasing it into their destinations so they too are faced with these higher logistical costs and the risks that are associated with it which under let's say traditional circumstances might have not been as challenging because if you are buying a large amount these costs get spread out however at the same time many of the agencies are suffering from budget cuts which is impacting their ability to purchase and to ensure that these commodities are distributed to the final consumers so we are talking about a coincidence of two factors here one is the increased costs that are associated with these supply chain bottlenecks or shock points or whatever you call them and the second one is the rather declining funding that is available for these operations so if indeed and right now let's say in a relatively comfortable situation on the global markets so should there be another shock that will be sending the prices higher and you have these higher shipping costs combined with the lower funding availability this will impact the ability of the agencies to actually fulfill the needs that are in the respective countries well very concerning kidney and monica and thank you for providing more details on that for everybody information in around 20 of April we will be coming out with the 2024 edition of the global report on food prices that will indeed present the acute food insecurity situation in which as you say double burden increased costs and less funding going to that sort of activities so very concerning terms of global food insecurity so colleagues I don't see any other question in the Q&A module so I would like to now invite Bubaka Ben-Bel-Alsen the director of the trade and market division to deliver some words of wisdom and concluding remarks over to you Bubaka we can't hear you Bubaka today we have technical issues it's a day of technical issues thank you Dominique good afternoon from Rome dear colleagues ladies and gentlemen thank you for joining us in this briefing session and for your interest and participation we hope that you found this session informative and then it has contributed to promoting and to gaining a better understanding of the current challenges of global agricultural supply chains and that possible application for food security as Dominique highlighted in his opening in FIU we recognize the essential role that international agri-food trade and the global value chains can play in meeting the global food security objectives and as you know very well trade is recognized as one of the key means of implementation for the 2030 agenda of the FIU SDG so this highlights the critical importance attached to trade in the 2020 edition of one of the FIU flagship reports and it's the flagships one of them is the state of agricultural commodity markets what we refer to as SOCO we have showed very clearly and through empirical data and estimation that about one third of the world food and agriculture exports within global value chains that involve at least three countries so this underlines the importance of ensuring the smooth movement of goods between the countries in this context in FIU we are strong advocates of the need to ensure smooth and well-functioning international trade and supply chains this becomes even more important during periods of trade disruptions that we discussed today and Monika showed very clearly the impacts of those disruption and how they can threaten the food security especially of vulnerable population in different parts of the world also as discussed today we see that diverse drivers are behind or cause these disruptions although some of them have eased for example the low water levels in the Mississippi river in other parts like in the Panama Canal, low waters continue to constrain the crossings with implication for transportation and logistics in major exporting countries at the same time security-related disruption in the Red Sea are affecting traffic along the shipping route connecting the Indian Ocean with the Mediterranean Sea this diversity of the causes and so the complexity of the challenges highlight the need for efficient and sustainable logistics and transportation networks including through partnerships and agreement and knowledge sharing and appropriate policies that promote robust and resilient supply chains so these are a very important policy or important recommendation that we promote in FAO market transparency and the provision of up to date and reliable or credible information objective information are essential in this regard and play a key role in fostering the efficiency and resilience of agri-food systems in FAO we maintain as I hope you know a comprehensive market intelligence service for the major agricultural communities and we provide regular analysis and assessment with the objective or the aim to facilitate informed policy decision and also to allow timely intervention especially in periods of crisis or warnings for looming food security situations in FAO and Dominique already mentioned that we host the secretariat of the agricultural market information system AMIS in short which is a G20 initiative that was established back in 2011 by the G20 agricultural ministers following the global food price crisis between 2007 and 2010 AMIS works to enhance transparency by developing methods and indicators to reflect food market development and promotes policy dialogue and coordination in this regard in response to a request from the G20 following the disruption created by the outbreak of COVID-19 and also they were in Ukraine the AMIS secretariat we are developing a work stream that's dedicated to shipping logistics with the aim to monitor the trade flows of food and it's hope that this should allow us to have good information and also be able to conduct better and timely assessment of the impacts of trade and shipping disruption so this is work coming up and we hope we'll have the opportunity to present it in a future briefing session once again thank you for joining us today and we look forward to engaging with you in future events Dominique back to you and thank you for the opportunity Thank you very much indeed Boubacar for your remarks and for informing us on this new work stream that you have in your division and of course we'll all be looking forward to further briefing on this very very important topic I take this opportunity Boubacar to thank you personally but also your division colleagues in your division Monika for our excellent presentation and of course big thanks to the participant today please do not hesitate to reach out to us should you need any additional information we will share with you the presentation as well as the recording of the event today and we wish you a good rest of the afternoon and look forward to your participation in future events thank you very much and goodbye