In what looks like a repeat of the 2008 food crisis, the price of basic food commodities is rising across the world. This has led many countries to restrict exports as they try to contain prices at home.
The Effects of COVID-19
Prices have been rising for the last two years as a result of the pandemic affecting production and distribution, but the war between Russia and Ukraine has dwindled supplies of essential food crops even further. Wheat, which accounts for more than 30% of global production, sunflower oil, which accounts for more than 80%, and items such as sugar, barley, and corn are among the most important.
Rising Protectionism across the World
To secure home supplies, Serbia, Bulgaria, Egypt, and Romania have all moved to ban or restrict export of grains, squeezing global supplies further. Morocco has reduced tomato exports while Algeria has banned the export of all food products made from imported materials.
The war’s impact on fertilizer is also affecting the ability of other countries to grow their own food, leading to a decline in supply and food insecurity at home. Fertilizer prices have jumped up to 50% in some countries.
The warring parties are beginning to worry that their own supplies won’t be enough to match demand at home. Ukraine has placed restrictions on wheat, sugar, and meat while Russia is limiting the export of wheat, rye, barley, and maize to its European neighbors.
The Palm Oil Hike
Another food product that is facing a price rise is palm oil, the most widely consumed vegetable oil in the world. In order to bring down prices at home, the world’s biggest producers like Indonesia and Malaysia are restricting exports. As the most consumed cooking oil in the developing world, this will affect the world’s poorest people.
These restrictions have raised prices around the world not just for palm oil but the other products of which palm is an essential component like margarine, chocolate, deodorant, shampoo, toothpaste, and shampoo.
The Climate Factor
Severe weather is affecting the cultivation of wheat in places like China, soy in Brazil, coffee and corn production in Africa, and the increase in pests that destroy certain food crops. The impact of the rise in food prices is already causing social unrest around the world with protests and even leadership changes. The richest countries in the world might be able to hold tight for a while but that’s harder for places where a significant amount of the household budget goes into buying food.
This means that less money is going into education, healthcare, and basic services that will lift vulnerable communities out of poverty. To reverse this, we will need a concerted effort to mitigate conflict, boost local production, and deal with the effects of climate change.
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