Bloomberg reports that governments across the world know that rising food costs can come with a political price. The dilemma is whether they can do enough to prevent having to pay it.
Global food prices were up 33 per cent in August from a year earlier with vegetable oil, grains and meat on the rise, data from the United Nations Food and Agriculture Organization show.
And it’s not likely to get better as extreme weather, soaring freight and fertilizer costs, shipping bottlenecks and labor shortages compound the problem. Dwindling foreign currency reserves are also hampering the ability of some nations to import food.
From Europe to Turkey and India, politicians are now handing out more aid, ordering sellers to cut prices and tinkering with trade rules to mitigate the impact on consumers.
The issue is more acute in emerging markets where the cost of food accounts for a greater chunk of household spending, and in crisis-hit nations. In Lebanon, militant group Hezbollah has tightened its grip on the country by distributing food. But even the U.S. is taking action to address affordability made more urgent during the coronavirus pandemic.
“Governments can intervene and commit to supporting lower consumer prices for a while,” said Cullen Hendrix, non-resident senior fellow at the Peterson Institute for International Economics, a Washington-based think tank. “But they can’t do it indefinitely.”