Food prices rise record due to war in Ukraine

(Bloomberg) World food prices are rising at the fastest pace in history, while the war in Ukraine stifles crop supplies, increasing inflationary pressures for consumers and worsening a global hunger crisis.

The war has wreaked havoc on supply chains in the crucial Black Sea crop region, disrupting global trade flows and fueling panic over the shortage of key commodities such as wheat and cooking oils. That sent food prices, which were already rising before the conflict began, to a record high. The United Nations index of world food costs soared another 13 per cent last month.

Ukrainian ports are closed and many ships bypass the region, which accounts for about a quarter of all grain trade. Farmers in Ukraine, the leading exporter of sunflower oil, are expected to drastically reduce crop plantations and the nation is having difficulty exporting already harvested supplies. In other parts of the world, high energy and fertilizer prices are driving up food production costs, resulting in higher grocery bills or threats to production.

The spike in food prices is most felt in poor countries where groceries account for a large part of consumer budgets, and the consequences of Russia's invasion of Ukraine have skyrocketed the costs of basic foods such as bread. The United Nations World Food Programme recently said that expensive staple foods in import-dependent nations of the Middle East and North Africa are putting people's resilience at a “turning point.”

Rising costs are prompting some countries to delay imports, seek new suppliers or reduce local reserves, although that will not be a long-term solution, said Erin Collier, an economist at the Food and Agriculture Organization of the United Nations (FAO).

“It's basically a kind of lawsuit deterrence,” he said in an interview. “That can only last a while. Wheat is a staple food.”

The FAO global price indicator has risen 75% since mid-2020, overshadowing the levels observed in 2008 and 2011 that contributed to the global food crises. Last month's increase caused prices to complete a seventh consecutive quarterly increase, the longest streak since 2008.

The UN has warned that prices could still rise much higher.

That is bad news for the problem of world hunger. If no action is taken, the rising costs of the war and the resulting sanctions on Russia will push more than 40 million more people into extreme poverty, according to an analysis published last month by the Center for Global Development, a non-profit group of experts, whose sponsors include Bloomberg Philanthropies.

In addition to the food supply risks associated with the war in Ukraine, farmers around the world continue to deal with severe weather events and the impact of global warming. For example, the worst drought in decades is killing millions of livestock in the Horn of Africa, while global warming is exacerbating food insecurity in places like Afghanistan.

Original Note:

Food Prices Jump Most on Record as War Sparks Supply Chaos (1)

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