2022 could be the toughest year of the global food system
The firms ‘comments came in the wake of Russian forces’ invasion of Ukraine on February 24 and the subsequent rise in commodity prices – especially wheat, corn, cooking oils and barley. Fertilizer supply was also affected as Russia was a major supplier, but shipping and currency exchange issues became more complicated.
Energy, food prices
Retail inflation in India hit a 17-month high in March on the back of rising fuel prices. Inflation in the UK hit a 30-month high of 7% in March, while US inflation rose to 8.5%, a 40-year high.
Zurich-based global private banking group EFG International said rising energy, shelter and food prices were the biggest contributors to inflation in March. In the US, fuel prices rose 11 percent on a monthly basis and food prices rose one percent on a monthly basis.
According to the World Bank, Russia’s invasion of Ukraine could exacerbate rising energy and food prices, exacerbating existing food security concerns in West Asia and Africa. World Bank Chief Economist Carmen Reinhardt said in a statement that they were fueling growing social unrest.
Emerging economies have been hit
The International Food Policy Research Institute in Washington echoed this view, noting that the food crisis preceded the conflict. It came before the world community recovered from the Kovid influence. “Africa is arguably one of the most vulnerable areas (food inflation),” it said.
A 20 per cent rise in crude oil prices since the start of the war has been a major concern around the world. Farmers are suffering severely due to the availability of fertilizers due to rising crude oil prices.
The Food and Agriculture Organization (FAO), a division of the UN, recorded its food price index at a record 159.3 points in March, up more than 12 percent since February. In March, the cereal index rose 17.1 per cent and the vegetable oil index 23.2 per cent.
The FAO lowered its expectations for wheat and corn production, exports and consumption due to the impact of the war.
Asley Demirgh-Kunt, chief economist at the World Bank for Europe and Central Asia, said the war was seriously damaging emerging and emerging economies in Europe and Central Asia, leading to an economic slowdown from the region’s already ongoing effects. .
The US Department of Agriculture’s Economic Research Service estimates that all food prices will rise between 4.5 and 5.5 percent this year. Home food prices are expected to rise between 5.5 and 6.5 per cent, while home food prices are projected to rise between 3.0 and 4.0 per cent. Food prices at home have risen the most since 2008.
The US rating agency Fitch said global food prices have risen sharply since the start of the war in Ukraine and that the direct impact on inflation will be more severe in emerging markets as the Kremlin and Kyiv together account for one-third of global wheat and barley exports. . He also owns 65% of the world’s sunflower oil business.
“The destruction of Ukraine’s port infrastructure and the mining of the Black Sea have greatly reduced grain exports,” it said.
Fitch Solutions, Fitch Group’s research firm, has raised its wheat price forecast for 2022 and 2023 because “Russia’s attack on Ukraine is a combination of investor panic and global warming from both countries will keep prices below ground level.” That said, it comes at a time when the wheat market is already very tight and buffer stocks around the world are low.
Fitch Solutions expects wheat prices to average $ 338 per tonne this year. It estimates grain prices average $ 248.
Spend more for food
The World Bank estimates that households spend half of their income on food, and that a one percent increase in food prices would reduce their real income by 0.5 percent.
This increase will weaken people living in extreme poverty as they spend two-thirds of their income on food. The World Bank says governments can mitigate such effects through social security policies.
However he acknowledged that their numbers were not enough to defeat President Conte’s government.
“For economies that are still reeling from the pandemic, inflationary pressures (due to the war) will not come at the worst possible time,” it said.
April 16, 2022