Global food prices hit 2-decade high, threatening world's poorest

The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. PHOTO: AFP

WASHINGTON (NYTIMES) - Food prices have skyrocketed globally because of disruptions in the global supply chain, adverse weather and rising energy prices, increases that are imposing a heavy burden on poorer people around the world and threatening to stoke social unrest.

The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. They come as farmers around the globe face an array of challenges, including drought and ice storms that have ruined crops, rising prices for fertiliser and fuel, and pandemic-related labour shortages and supply chain disruptions that make it difficult to get products to market.

A global index released on Thursday (Feb 3) by the United Nations Food and Agriculture Organisation showed that food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya.

The price of meat, dairy and cereals trended upwards from December last year, while the price of oil reached the highest level since the index's tracking began in 1990.

Dr Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics who was formerly chief economist at the International Monetary Fund, said that food price increases would strain incomes in poorer countries, especially in some parts of Latin America and Africa, where some people may spend up to 50 per cent or 60 per cent of their income on food.

He said that it was not "much of an exaggeration" to say the world was approaching a global food crisis and that slower growth, high unemployment and stressed budgets from governments that have spent heavily to combat the pandemic had created "a perfect storm of adverse circumstances".

"There's a lot of cause for worry about social unrest on a widespread scale," he added.

Even before the pandemic, global food prices had been trending upwards as disease wiped out much of China's pig herd and the United States-China trade war resulted in Chinese tariffs on US agricultural goods.

But as the pandemic began in early 2020, the world experienced seismic shifts in demand for food. Restaurants, cafeterias and slaughterhouses shuttered, and more people switched to cooking and eating at home. Some American farmers who could not get their products into the hands of consumers were forced to dump milk in their fields and cull their herds.

Two years later, global demand for food remains strong, but higher fuel prices and shipping costs, along with other supply chain bottlenecks like a shortage of truck drivers and shipping containers, continue to push up prices, said Mr Christian Bogmans, an economist at the International Monetary Fund (IMF).

The high cost of energy remains a particular challenge, said Dr Obstfeld, since it increases transport costs for food, drives up the price of fertilisers, which require a lot of energy to produce, and diverts grain into biofuel production.

Drought and bad weather in major agricultural-producing countries such as Brazil, Argentina, the US, Russia and Ukraine have worsened the situation.

The IMF's data shows that average food inflation across the world reached 6.85 per cent on an annualised basis in December last year, the highest level since its series started in 2014.

Between April 2020 and December 2021, the price of soya beans soared 52 per cent, and corn and wheat both grew 80 per cent, the fund's data showed, while the price of coffee rose 70 per cent, due largely to droughts and frost in Brazil.

While food prices appear set to stabilise, events like a conflict in Ukraine, a major producer of wheat and corn, or further adverse weather could change that calculation, Mr Bogmans said.

The effects of rising food prices have been felt unevenly around the world. Asia has been largely spared because of a plentiful rice crop. But parts of Africa, the Middle East and Latin America that are more dependent on imported food are struggling.

Countries such as Russia, Brazil, Turkey and Argentina have also suffered as their currencies lost value against the US dollar, which is used internationally to pay for most food commodities, Mr Bogmans said.

In Africa, bad weather, pandemic restrictions and conflicts in Congo, Ethiopia, Nigeria, South Sudan and Sudan have disrupted transportation routes and driven up food prices.

Dr Joseph Siegle, director of research at National Defense University's Africa Centre for Strategic Studies, estimated that 106 million people on the continent are facing food insecurity, double the number since 2018.

"Africa is facing record levels of insecurity," he said.

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