Sharp rise in global food prices -World Economic Forum
- Global food prices reached their highest ever level in March 2022.
- Food commodity prices increased by a third compared to the previous year.
- Russia’s invasion of Ukraine has added to wider post-pandemic price growth.
Global food commodity prices hit an all-time high in March following Russia’s invasion of Ukraine, according to the UN Food and Agriculture Organization (FAO).
Alongside the continuing humanitarian crisis, the conflict has destabilized Ukraine’s economy, with the World Bank predicting a more than 45% fall in economic output in 2022.
The Russian Federation and Ukraine, combined, supply around 30% of global wheat exports and around a fifth of the world’s maize. Shortages of these and other commodities have destabilized global supply chains, sending food prices soaring.
What is the World Economic Forum doing to help ensure global food security?
Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.
New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.
Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.
With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.
The FAO Food Price Index measures the monthly change in global prices of a basket of food commodities. Figures for March show a 12.6% increase in global food prices compared to February, the highest price levels recorded in the index’s three-decade history. Year-on-year comparisons show index prices increased by a third compared to March 2021.
The FAO’s Food Price Index has seen a sharp rise
Increasing food prices
Staple goods like grains and vegetable oils are among the worst affected foodstuffs.
The FAO’s Cereal Price Index was more than 17% higher in March than February, driven by lower wheat and coarse-grain exports onto the world market: global wheat and maize prices each increased by around a fifth during the month of March.
As Ukraine is the world’s leading exporter of sunflower seed oil, supply shortages helped drive a 23% monthly increase in the FAO’s Vegetable Oil Index. A perfect storm of rising sunflower oil prices, increased costs of crude oil and reduced vegetable oil exports from South America, caused prices of other oils like palm, soy and rapeseed to surge.
Smaller increases were also recorded in the global price of commodities like sugar, meat and dairy products.
Rising cost of living
Higher global food prices are part of a wider trend of cost of living increases already at work in both advanced and emerging economies, exacerbated by Russia’s invasion of Ukraine.
The cost of vegetable oil has risen sharply, according to the FAO
The global economy is still some way off a recovery, following the economic impact of the COVID-19 pandemic. Rising inflation, supply-chain disruptions – that are yet to return to pre-pandemic ‘normal’ levels – and other post-lockdown hangovers have caused prices to increase, for everything from food to energy bills.
While the squeeze on household incomes is an unwelcome visitor to most homes, low-income families in developing countries will be worst affected. For the developing world, higher prices go hand in hand with greater food insecurity as reduced exports of cereals and other commodities pose the greatest threat for these regions.
But, despite the impact on food exports due to the war in Ukraine, the FAO Cereal Supply and Demand Brief forecasts global wheat production in 2022 will reach 784 million tonnes, a 1.1% increase from the previous year. This is due to favourable production trends in regions like China, India, North America and the European Union, which could help stabilize global markets and provide food security to those who need it most.
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