Prices soaring across globe
WASHINGTON » Food prices have skyrocketed globally because of disruptions in the world’s 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 fertilizer and fuel, and pandemic-related labor shortages and supply chain disruptions that make it difficult to get products to market.
A global index released Thursday by the United Nations Food and Agriculture Organization 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 upward from December, while the price of oil reached the highest level since the index’s tracking began in 1990.
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% or 60% of their income on food.
He said 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 upward as disease wiped out much of China’s pig herd and the U.s.-china trade war resulted in Chinese tariffs on U.S. 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, such as a shortage of truck drivers and shipping containers, continue to push up prices, said Christian Bogmans, an economist at the IMF.
Drought and bad weather in major agricultural producing countries such as Brazil, Argentina, the United States, Russia and Ukraine have worsened the situation.
The IMF’S data shows that average food inflation across the world reached 6.85% on an annualized basis in December, the highest level since its series started in 2014. From April 2020 to December 2021, the price of soybeans soared 52%, and corn and wheat grew 80%, the fund’s data showed, while the price of coffee rose 70%, largely because of droughts and frost in Brazil.
Although food prices appear set to stabilize, events like a conflict in Ukraine, a major producer of wheat and corn, or further adverse weather could change that calculation, Bogmans said.
The effects of rising food prices have been felt unevenly around the world. Asia largely has been 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 suffered as their currencies lost value against the dollar, which is used internationally to pay for most food commodities, Bogmans said.
In Africa, pandemic restrictions and conflicts in Congo, Ethiopia, Nigeria, South Sudan and Sudan have disrupted transportation routes and driven up food prices.
Joseph Siegle, director of research at National Defense University’s Africa Center 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.
While shopping at a market in Mexico City’s Juarez neighborhood Thursday, Gabriela Ramírez Ramírez, a 43-year-old domestic worker, said the increase in prices had strained her monthly budget, about half of which goes to food.
Inflation in Mexico reached its highest rate in more than 20 years in November, before easing slightly in December.
“It affects me a lot because you don’t earn enough, and the raises they give you are very small,” Ramírez said. “Sometimes we barely have enough to eat.”
The effect has been less severe in the United States, where food accounts for less than one-seventh of household spending on average, and inflation has become broadbased, spilling into energy, used cars, dishwashers, services and rents as price increases reach a 40year high.
Yet U.S. food prices have still risen sharply, putting a burden on the poorest households, which spend more of their overall budget on food. Food prices rose 6.3% in December compared with a year ago, while the price of meat, poultry, fish and eggs jumped 12.5%, according to the Bureau of Labor Statistics.
On Monday, the Department of Agriculture announced that it was partnering with the Port of Oakland in California to set up a 25acre “pop-up” site where empty shipping containers could be filled, to try to speed their shipment out of the country.
Maria Zieba, assistant vice president of international affairs at the National Pork Producers Council, said pork farmers were confronting a variety of challenges, including shipping container prices that are on average 170% higher than a year ago, last-minute cancellations of their shipments, and a lack of trucks and cold storage facilities.
“These are all the things that are adding to the price that you’re seeing at the grocery store,” Zieba said.