The last sharp increase in food prices occurred in 2020-2022. And this was the third jump in the last 15 years.
Photo: Timur Sharipkulov
A food crisis is developing on our planet right now. It’s hard to believe, looking at the crowded shelves in supermarkets. But the food shortage, according to the UN, is already felt by some 2 billion people in 80 countries. And about 20 thousand people die every day from hunger and its consequences.
The last sharp increase in food prices occurred in 2020-2022. And this was the third jump in the last 15 years. In the first half of 2023, prices seem to have fallen, but in July, a new increase. What then are the reasons for the lack of food on the planet?
Reason number 1. Conflicts and wars.
This is one of the main reasons: 70% of the hungry live in areas where fighting takes place. And the current armed confrontation in Ukraine has also affected the most sensitive points: the supply of energy, fertilizers and agricultural products.
Before the outbreak of hostilities, Russia and Ukraine exported significant shares of wheat (18% and 10%), barley (14% and 12%), and sunflower oil (26% and 37%) to world markets. After the start of the crisis, exports of agricultural products from Ukraine decreased by 30-40%. Countries in Europe, Asia and Africa had to find new suppliers and build new delivery routes, leading to higher prices.
Reason number 2. Natural disasters
This is especially true in Africa and Southeast Asia. In 2021-2022, the rainfall deficit reached 80%. Sad result: from mid-2021 to April 2022, around 3 million head of cattle died in Kenya and Ethiopia. The situation is similar in Somalia.
And in the western part of the continent the opposite is true: floods destroy arable land. According to the UN, agricultural productivity in Africa decreased by 34% in 2022.
They suffer climatic anomalies in India, China and South America. El Niño and La Niña currents constantly make themselves felt: the water temperature in the equatorial Pacific Ocean changes, which affects precipitation in Asia and South America.
The weather doesn’t spare the United States either. Due to the heat of 2022, the wheat harvest in America was halved, and in southern Europe, weather anomalies caused losses of billions of euros…
The weather doesn’t spare the United States either. US wheat crop cut in half due to 2022 heat wave
Photo: GLOBAL LOOK PRESS
Reason #3 Energy Crisis
For the production, delivery, packaging and storage of products energy is needed: gas, oil, electricity. And gas and oil increased sharply in 2021-2022 (the price of blue fuel shot up several times). The world is still feeling the consequences of this leap.
Reason number 4. Lack of fertilizer.
Modern agriculture is unthinkable without mineral fertilizers, the price of which is constantly increasing. From 2022, this market is in a fever again: the disruptions in the supply from Russia, the introduction of export quotas by China and the increase in the price of natural gas in 2022, a key component in the manufacture of nitrogenous fertilizers, have affected. Gas problems have forced many countries to reduce their own production.
As a result, the prices of certain types of fertilizers tripled, which immediately affected the cost of products. Lack of fertilizer will surely affect the yield.
Many factors influence world prices. The cost of individual products may not only increase, but prices may also decrease. But, as the experts joke, if prices fall on the stock markets, they don’t fall on our kitchen table. After all, the value of agricultural products is mainly formed after they leave the farm. We are talking about the cost of energy, processing, packaging, shipping, labor… And each of these elements adds up in price year after year. As a result, on the way to the store, the products become 2-3 times more expensive, or even more.
Cereals, rice, cocoa and oranges are rising in price faster than other products this year. Let’s find out why.
irrational grain
The world cereal market is shaking. In early March, wheat prices reached an all-time high: $12.09 per bushel (a unit of volume to measure grain, a bushel equals an average of 27.21 kg). Then they fell and then rose again, especially after Russia withdrew from the “grain deal”. The tension between Russia and Ukraine plays an important role here, since both countries are important suppliers of this product on the world market.
Now the price of wheat on the exchanges has fallen to $6.5 a bushel, but it is hard to say how prices will behave in the future. On the one hand, the demand for cereal-based feed is slowing down. On the other hand, an increase in the consumption of cereals leads to an increase in the world population.
By 2031, world trade in cereals should grow by 15%, and wheat in total volume will account for around 40%. And Russia will remain one of the leaders in the export of wheat to the world market (the share is more than 20%). The good harvests in our country also add optimism.
The Ministry of Agriculture recently denied the information that in Russia, due to the situation in the grain market, the price of bread could rise. They assured us that Russia’s grain supply far exceeds domestic needs. Therefore, the increase in the price of bread this year will not exceed general inflation (according to the plan, no more than 6.5%).
Rice is a noble cause
Rice prices hit multi-year highs in August. For example, Thai white rice, a benchmark for Asian exporters, cost $650 a ton, 50% more than in August last year. Especially quickly the price of rice began to grow in July, after the announcement by the UN World Meteorological Organization about the appearance of El Niño, which caused droughts.
In addition, recently India -the largest supplier of rice- announced an 80% export ban on this product in order to contain the growth of domestic prices for this strategic product for the country. The United Arab Emirates and Russia have temporarily banned the export of rice. But rice continues to be a strategic product not only for India, but for 40% of the world’s population, especially in Asia. It provides basic nutrition to 3 billion people. And economists feared that fall rice prices could double from last year.
Russia is not yet threatened by price increases. First of all, our own country grows rice. We produce more than one million tons annually, a sufficient quantity to satisfy domestic demand. Second, the government introduced timely restrictions on the export of this product from the country; now farmers are not tempted to export rice, taking advantage of favorable prices.
Bye bye!
Cocoa beans, or rather the cocoa butter that is produced from them, are one of the main ingredients in the production of chocolate. The scarcity and increase in the price of cocoa will cause an increase in the prices of all confectionery products.
The cost of cocoa butter has risen 20% since the beginning of the year and has approached the highest level of the last half century, surpassing the $3,500 per ton mark in July. The reason is bad weather in West Africa. After all, just two countries in this region – Côte d’Ivoire and Ghana – account for 60% of world cocoa production.
Andrey Sharkov, founder of the ShokoBox factory, is sure that Russia will not be able to avoid a rise in chocolate prices. The reasons are the increase in prices of raw materials on world markets and the weakening of the ruble. After all, our chocolate is made with imported ingredients.
– I think that in the fall we should expect an increase in prices for chocolate products of an average of 10%, – told KP Andrey Sharkov. – In this case, its quality will be worse. Many producers will try to offset the price increase by replacing natural cocoa butter with cheap substitutes. The Russian market is not too demanding on quality, but those who appreciate authentic chocolate will feel the difference. And quality products with no substitutes will go even higher in price. My prediction is 20%.
Brazil has been and continues to be the world’s largest supplier of orange juice concentrate.
Photo: Shutterstock
no sweet oranges
Brazil has been and continues to be the world’s largest supplier of orange juice concentrate. But this year there is a poor harvest in the country and prices have risen. Unfavorable weather and poor citrus harvests in the United States, Mexico and Spain added fuel to the fire. As a result, in one year, the cost of a pound of frozen orange juice concentrate went from $2 to $3.
In Russia, prices for oranges have been increasing since 2020. And this summer, our retail chains faced a shortage of them, so they will probably continue to rise in price. The price of frozen orange juice concentrate has already increased in Russia by 30%. Which will inevitably lead to a proportional increase in prices.
TO THE POINT
pizza against okroshka
National dishes also reach the pocket
Official inflation figures don’t always reflect how ordinary citizens feel about rising food prices. In the EU, for example, food inflation is around 12.5%. But if we take the Margherita pizza, popular in Italy, its price in January 2023, according to Bloomberg, increased by 25% compared to January 2022. Moreover, official inflation in Italy during this period amounted to 10.7%. And all because the prices of cheese and flour have skyrocketed.
A similar situation occurs with the Spanish national dish, paella. It has risen in price by 19% in the year, with general inflation in Spain of 6%. It affected the increase in the prices of olive oil, vegetables and beans.
A classic British breakfast has gone up in price by 20% (this includes bacon, sausages, eggs, toast and a drink). The reason is the rising prices of milk, bread and eggs. By the way, in the United States it was eggs that skyrocketed in price: at the beginning of 2023, they cost 60% more than a year earlier.
But the price of okroshka has risen only 6% over the year. The culprits are mainly vegetables. Radishes have risen in price by almost a third compared to last year, cucumbers by 25% and chives by 5%. Even kvass increased its price by 6%. But potatoes and eggs fell in price.
VISIBLE
Changes in world food prices
Photo: Dmitry ORLOV
ONLY NUMBERS
29.3% of the world population suffers from moderate or severe food insecurity.
More than 345 million people will face “high levels of food insecurity” by 2023. In fact, they will be malnourished.
14 of the 15 most food insecure countries are in Africa.
According to the UN, FAO and the United Nations World Food Program.
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