Food prices soar

Rocketing food prices could cause social unrest

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With the world economy trying to recover from the Covid-19 hit in 2021, inflation is also rising. The world food inflation is currently at a level unseen in almost a decade and consumers are likely to see continued price spikes at grocery stores, at a time when their incomes are decimated. The economic recovery is “very uneven” across the world, with developing nations that rely heavily on imports of staple foods, facing higher import bills.

But the news aren’t better even for the world’s largest economy, the U.S. Last year, COVID-19 related restrictions sent prices for food purchased at grocery stores to an unusually high 3.5% increase.
The prices of many basic food items like meat, eggs, milk and even potatoes skyrocketed at the beginning of the pandemic, with May 2020 marking the steepest price incline of the cost of food bought to eat at home in 46 years.

For 2021,  the U.S. Department of Agriculture says the increases on many food items will be between 2-3% overall and it may take several more months before prices return to more normal trends. USDA Economist Carolyn Chelius recently bumped up the projected price forecasts for meats by 1% in the department’s latest Food Price Outlook. “We’re predicting beef and veal prices will increase 3-4% and pork prices 4-5%.”

What’s driving the surge in food prices?

Economists say the cost of global maritime transport has soared sharply over the past year, resulting in higher transport costs. Supply chain disruptions, a spike in commodity prices, demand for products outpacing manufacturers’ ability to produce enough supply of the raw materials, feed and grain costing farmers more, are all factors getting passed on to retail consumers. The effects of the COVID-19 primarily in terms of income losses, have also exacerbated vulnerabilities and heightened existing levels of food insecurity.

But isn’t it too simplistic to put the blame on Covid-19? The virus highlighted and worsened existing fault lines in society, especially economic inequality. The world’s richest became wealthier during the crisis, while poor are getting poorer. History repeats itself. Till when?

The World Food Programme (WFP), the world’s largest humanitarian organization,  estimates that a record 270 million people worldwide are acutely food insecure or at high risk this year, around a 70 per cent jump from 2020.

And FAO assesses that globally 45 countries, including 34 in Africa, 9 in Asia and 2 in Latin America and the Caribbean, are in need of external assistance for food. The agency’s latest Crop Prospects and Food Situation Report also provides the latest data on Low-Income Food Deficit Countries (LIFDCs).

According the most recent assessments, total cereal production of the 47 LIFDCs is forecast to decline by 2.1 percent in 2021, to 190 million tonnes. The drop mostly relates to expected production downturns in Near East Asian countries, notably in Afghanistan and the Syrian Arab Republic, where widespread and prolonged drought conditions cut yields and dampened this year’s production prospects.

Among the LIFDCs in Africa, scarce rainfall in Somalia is expected to result in a sizeable production decline, and small reductions are also likely in several West African countries, where conflicts continue to erode farming households’ productive capacities.

“High food prices are hunger’s new best friend. We already have conflict, climate and COVID-19 working together to push more people into hunger and misery. Now food prices have joined the deadly trio,” said Arif Husain, Chief Economist at the UN agency.

The crisis could push as many as 97 million people worldwide into poverty by the end of the year, according to the World Bank.

For social unrest to erupt all you need is a little spark. Rocketing food prices are clearly the main cause of social discontent and throughout history, riots have frequently broken out  as a consequence of high food prices.