Russia and Ukraine are the main causes of the persistently high price of food, which increases the pressure already put on the industry by supply chain problems and climate change.
According to Arif Husain, head economist at the United Nations World Food Programme, the war has “put a lot of fuel on an already burning fire.”
Ukraine is a significant producer of agricultural products like corn, wheat, and sunflower oil. Despite the fact that Russia has banned shipments abroad, Husain claimed that the cause of the world food crisis is not a shortage of food but rather rising food costs.
“This crisis is about affordability, meaning there is food available, but the prices are really high” On Monday’s “Capital Connection” episode of CNBC, he said.
Global food prices were 13% higher in July than they were a year prior, according to data from the U.N. Food and Agriculture Organization. And prices continue to rise. The U.N. predicts that, in the worst case, global food prices might increase by an additional 8.5% by 2027.
As costs are passed on to consumers, rising fertilizer prices also contribute to higher food prices. Prices increased as a result of restrictions on shipments by Russia, which exports around 14% of the world’s fertilizer. Crop yields have been affected as a result.
According to Mari Pangestu, managing director of development policy and partnerships at the World Bank, this will hinder the organization’s capacity to respond to the rise in food production over the next two years, along with high energy prices and supply chain disruptions. According to her, the current level of uncertainty may cause prices to remain high well past 2024.
Although Husain of the U.N. claimed that the current crisis is mostly caused by high prices and problems with affordability, he warned that if the fertilizer shortage is not remedied, it may develop into a catastrophe with food availability.
According to the U.N., the number of people experiencing “hunger emergencies,” which it defines as being on the verge of going hungry, has increased from 135 million in 2019 to 345 million, according to Husain.
Intense heat in China
In addition to climate change and extreme weather, other factors that exacerbate the world’s food insecurity include environmental factors. The largest producer of wheat in the world, China, has seen numerous weather-related calamities, including severe droughts and flash floods.
The nation declared its first drought emergency earlier this month as the central and southern provinces endured weeks of intense heat, with temperatures in dozens of cities reaching 40 degrees Celsius, or 104 degrees Fahrenheit. The heat wave has hampered crop growth and put livestock in danger.
“Rice production is certainly very vulnerable to changes in weather temperature,” remarked Bruno Carrasco, director general of the Asian Development Bank’s division of sustainable development and climate change. “When we look at the overall supply of food production in Asia-Pacific, approximately 60% of that is rain-fed farming.”
“We are very concerned given the overall weather events that we’ve seen and observed over the course of the year,” he added.