The Financial Times says global food prices have surged because of bad weather, such as droughts in North and South America and heavy rain in Europe, and the supply chain problems that came with the easing of coronavirus restrictions.
The FAO food price index rose at an astonishing annual rate of 31 per cent in October. The IMF’s food and beverages commodity index rose at a similar rate. In real terms, after taking into account inflation, global food commodity prices are now higher than their 2008 and 2011 peaks, just before the Arab spring protests that were partly caused by soaring food costs.
Poland’s agriculture minister was one of those to warn recently of a “food prices crisis”. In the worst-case scenario, rising food costs combined with surging energy prices have the potential to imperil the livelihoods of millions of people around the globe — just as the world emerges from the worst of the pandemic.
Even so, the data show that a 1970s style food price crisis that coincided with famine in some poorer countries is not here, yet. Although in some countries, especially in the emerging world, food prices are rising at double-digit rates, in others — notably in Europe and parts of Asia — the amount that shoppers pay at the till has actually been falling.
The main reason why consumers’ grocery bills are not rising at the same rate as indices suggest is that the latter captures the wholesale price paid to producers, and this only accounts for a fraction of what shoppers actually pay at the till.
Out of every dollar that US consumers pay for groceries, for example, just 15 cents go on food. The rest goes on others costs such as processing, marketing and distribution, said Marion Jansen, director of the Trade and Agriculture Directorate at the OECD.
Consumer price food inflation is running at 4.5 per cent across the OECD’s 30 mostly rich nations. That is three times what it was as recently as May. Even so, this increase is far “less acute” than for wholesale commodities prices so far, Jansen said.