Discussions on the global trade of food and agriculture commodities will likely feature prominently at the 17th G20 Head of States and Government Summit in Bali, on 15-16 November. The global food system has been greatly affected by Russia’s war on Ukraine. Both countries are major exporters of staple grains and fertiliser, and Russia’s intermittent blockades of Ukrainian ports has disrupted food supply and agricultural operations across the world. The Covid-19 pandemic has also left a weakened global economy and the world is facing more frequent environmental disasters. Food is situated at the centre of this mess.
This global food crisis is different from the last, in 2007-2008, because it also involves heightened international political tensions, in particular, between NATO and Russia. This G20 Summit brings together the key members of these two blocs, making it one of the one of the most important meetings in 2022. The G20 countries are among the world’s largest food exporters and importers. Whether discussions will manage to resolve the food crisis depends largely on the trade agendas of the member states.
One way to understand the politics of G20 trade relations is through the global production and consumption of instant noodles. This industry is now worth US$54.60 billion and is projected to rise to $81.84 billion by 2029. Growing global demand for instant noodles is also increasing trade in its two main ingredients: wheat and palm oil. To produce these two crops at an industrial scale also requires large amounts of fertiliser. All G20 countries are either major exporters or importers of these key commodities, except South Africa.
Instant noodles are cheap and convenient. Despite their low nutritional value, instant noodles fulfill the needs of a food insecure world. More than half of the world’s population live in urban centres and do not have means to be food self-sufficient. They rely on mass produced food with long shelf lives, like instant noodles. The precarity of work and income also encourages a preference for affordable food.
Global demand for instant noodles is dominated by seven of the G20 countries: China (1), Indonesia (2), India (4), Japan (5), USA (6), South Korea (8), and Brazil (10). Five of the G20 members are the world’s top instant noodle exporting countries: South Korea (1), Indonesia (3), China (4), India (6) and Japan (7). Meanwhile, the biggest instant noodle importers among the G20 countries are USA (1), India (4), Australia (9), and Canada (13). These four countries are also wheat exporters.
In fact, G20 member states are major exporters and importers of wheat. Eight of the nine countries in the world that supply the bulk of wheat volume for international trade are G20 members: Russia (1), USA (2), Australia (3), Canada (4), France (6), Argentina (7), Germany (8) and India (10).
The other major wheat exporting country is Ukraine (5), which is the only one that is not a G20 member. Wheat from Russia and Ukraine, sometimes known as Black Sea wheat, is generally cheaper to produce than wheat in places like Australia, and has been viewed as a threat to Australian wheat exports. Under the unfortunate circumstances of the war, Australia has seen its wheat exports rise.
The world’s biggest wheat importers also include G20 countries: Indonesia (1), China (3), Turkey (4), Italy (7), and Japan (10), with Brazil (11) and South Korea (14) not far behind. China is actually the world’s biggest producer of wheat but it does not produce enough to meet its domestic needs, hence the need for imports.
Countries that produce surplus wheat for exports are importing it back in the form of instant noodles. For example, Russia and Australia both are major wheat exporters and among the top 20 instant noodles importers. This circular flow is typical in the globalisation of food. But it is unsustainable because of countries’ dependencies on commodities within the global food system.
As mentioned, the other major ingredient of instant noodles is palm oil. Indonesia is the world’s largest palm oil exporter by far, with a market share of close to 60% of global supply. It is the only major exporter of palm oil in the G20. Eight G20 members rank within the top 20 palm oil importers: India (1), China (2), EU (3), USA (5), Turkey (14), South Korea (15), Japan (16), and Saudi Arabia (18). India, China, South Korea and Japan are also exporters of instant noodles.
Palm oil policy has often caused headaches for Indonesia. The country has faced severe international criticism over the links between palm oil production and deforestation, and the EU has made moves to phase out palm oil from its renewable energy program. Yet the global food crisis saw massive spikes in demand for Indonesian palm oil. When Indonesia briefly restricted exports of palm oil in an attempt to curb soaring domestic prices, it also saw fierce criticism for its impacts on international trade.
What does this interconnectedness mean?
The complex commercial webs described above are examples of just how interconnected the economies of all the G20 countries are, and how meeting the food needs of their citizens is closely linked to global politics. G20 countries’ specialisation in particular imports and exports has led to vulnerabilities and dependencies, which the world is now seeing play out in the global food crisis.
The instant noodle example shows just how interdependent G20 members are on the international trade in wheat and palm oil. South Korea, Indonesia, China and Japan are among the world’s biggest instant noodles exporters and they have been badly affected by the war between Russia and Ukraine. Whether other wheat exporting countries are able to step in to meet global demand remains in question, because of severe weather conditions, like floods in Australia and drought in the US.
Indonesia is especially reliant on wheat imports, because is the only wheat importing country in the G20 with a tropical climate unsuitable for any wheat cultivation. As the world’s second largest consumer and the third biggest exporter of instant noodles – indeed the country considers Indomie part of its national identity – Indonesia has been greatly affected by the soaring price of wheat. Many analysts suggested that it was Indonesia’s dependency on Ukrainian wheat that prompted President Joko Widodo’s visit to Russia and Ukraine in June and July. Even popular noodle chain Bakmi GM has started advertising rice noodles as an alternative.
As the host of this year’s G20 summit, Indonesia can play a part in finding solutions to the global food crisis. Indonesia’s domination of palm oil exports will allow it to have a prominent role in negotiations with the EU and the US, the two key players in NATO, and major importers of Indonesian palm oil. Indonesia must ensure that efforts to address the global food crisis do not result in Global North countries benefiting at the expense of the Global South. For example, there have already been claims of Ukrainian wheat being diverted to rich countries ahead of poor food insecure countries.
The G20 Summit is likely to be the last meeting for this year that brings together the heads of the countries that play a central role in the global food system. As exporters or importers of key commodities of the highly complex global food system, G20 members hold the key in addressing the current food crisis, and Indonesia in particular. It needs to find solutions to the crisis for the world’s sake, but its own future is at stake too.