Food prices remain persistently high as Russia’s war in Ukraine continues, adding to existing pressures from supply chain disruptions and climate change.
The war “added a lot of fuel to an already burning fire,” said Arif Hussain, chief economist at the U.N.’s World Food Program.
Ukraine is a major producer of such commodities as wheat, corn and sunflower oil. Although exports have been limited worldwide due to Russia’s invasion, Hussain said the global food crisis is not caused by food availability, but by rising prices.
“This crisis is about affordability, meaning food is available, but prices are really high,” he said Monday on CNBC’s “Capital Connection.”
According to the Food and Agriculture Organization of the United Nations, world food prices in July were 13% higher than a year ago. And prices may continue to rise. In the worst-case scenario, according to UN estimates, global food prices could jump another 8.5% by 2027.
Fertilizer prices are also rising, which is driving up food prices as costs are passed on to consumers. Prices jumped after Russia, which accounts for about 14% of global fertilizer exports, restricted exports. This in turn worsened productivity.
This, combined with high energy prices and supply chain disruptions, will affect the World Bank’s ability to respond to increased food production over the next two years, said Marie Pangestou, the World Bank’s managing director for development policy and partnerships. All this uncertainty could keep prices high beyond 2024, she said.
While the UN’s Hussain argued that the current crisis was mainly caused by high prices and availability issues, he said it could turn into a food availability crisis if the fertilizer problem is not addressed.
The UN estimates the number of people in “hunger emergencies,” which it defines as one step away from starvation, jumped from 135 million in 2019 to 345 million, Hussein said.
Heat in China
Extreme changes in weather and climate are also worsening the conditions conducive to global food security. China, the world’s largest producer of wheat, has been hit by numerous weather disturbances, from flash floods to severe droughts.
Earlier this month, the country issued its first drought emergency as central and southern provinces suffered from intense heat, with temperatures exceeding 40 degrees Celsius, or 104 degrees Fahrenheit, in dozens of cities. The heat has hampered crop production and endangered livestock.
“Rice production is definitely very vulnerable to changing weather temperatures,” said Bruno Carrasco, director general of the Asian Development Bank’s Sustainable Development and Climate Change Division. “If we look at the total supply of food production in the Asia-Pacific region, approximately 60% of it is from subsistence agriculture.”
“We are very concerned about the general weather phenomena that we have seen and observed throughout the year,” he added.