2021 witnessed a stark spike in food prices. The UN food agency reports prices jump of 28% during the years, touching the highest level since 2011, along with the warning of a potential global food crisis in 2022.
So, why are food prices escalating globally? And what can be done to bring them down?
The Looming Food Crisis
After two years of the pandemic, 2022 was looking hopeful. However, As the new Omicron variant rips across the globe, any sense of normalcy does not seem likely regarding agricultural commodity prices, the bank stated in its report titled Hell in the Handbasket.
Other than a month of slight relief in December 2021, food prices were peaking all-time high throughout the year. In 2021, vegetable oil prices increased 65.8%; sugar prices rose to their highest level since 2016, and meat prices were 12.7% above 2020 prices.
So, what is driving this sudden spike in food prices globally? Experts believe the following three to be the primary driver of the current food crisis:
1. Extreme Weather
Extreme weather events caused spikes in agricultural commodities prices in 2021, which is likely to be continued into 2022 as a consequence of damaged crops.
In response to extreme temperatures and flooding last year, the price of goods including Belgian potatoes, Brazilian coffee, and Canadian yellow peas – in demand as a plant-based protein substitute – rose sharply.
In July, Brazilian coffee prices soared to near seven-year highs after severe frosts hit the country’s coffee belt. A shortage of container ships and disruptions in the global supply chain also contributed to higher prices later in the year. In addition, Brazil has continued to experience erratic weather, raising concerns that could further worsen the crop damage.
During mid-2021, an unprecedented heatwave and drought-hit Canadian production and sent pea prices soaring. It drove the prices of peas, a key ingredient in plant-based meat alternatives, to double up.
According to the Stockholm Environment Institute report, sugar cane yields could fall 59 percent by 2100 compared to yields between 1980 and 2010, while Arabica coffee yields and maize yields could fall 45 and 27 percent, respectively.
Soaring Wheat Prices
Wheat is one of the commodities that encapsulates the pressures on global food prices and the risks that come with it. Globally, wheat is experiencing its largest deficit since 2012–13, while Chicago wheat prcies are near a nine-year high. In addition, it is the second consecutive year in which wheat inventories are low — following ten previous years when wheat production exceeded demand.
Drought and high temperatures ravaged major wheat producers, including the Canada, U.S., and Russia, which was exacerbated by two consecutive La Nia events.
2022 Food Crisis
Researchers warn that climate change will make these conditions more frequent and intense as it progresses.
Concurrent crises, such as droughts that follow one another, are also likely to exacerbate shortages and become more common as temperatures rise.
2. COVID-19 Pandemic
The global pandemic halted the world for a substantial amount of time. As a result, lockdowns and travel restrictions have severely impacted food production and manufacturing, along with distorting the global supply chain.
Grocery store shoppers continue to face sticker shock as prices have risen over the past year. According to the U.S. Department of Agriculture, consumer prices in November 2021 rose 7% over the same month last year. The increase is a 39-year high and the biggest since 2008.
The Bureau of Labor Statistics reports that meat prices have gone up 16%, and steaks have seen a 25% increase in price. According to the Wall Street Journal, a number of major food companies dealt with labor strikes, including Kellogg’s and Nabisco, in 2021.
Furthermore, owing to the labor shortage, higher prices of animal feed, gas, and other raw materials in the COVID-19 pandemic, many companies are planning to increase their product prices in 2022.
Sri Lanka: Acute Food Shortage
The COVID-19 pandemic in Sri Lank has resulted in severe food and basic supply crisis for the island country coupled with the plunging currency and depleting forex reserves. While the country’s currency is on a steep downfall, the infection surge and curbing measures is worsening the matter.
With around 22 million population, Sri Lanka is heavily dependent on imports for food products. But, the drop in tourism, which accounts for over 10% of the country’s GDP, caused the Sri Lankan economy to shrink by about 3.6%
3. Conflicts, Uprising, and Protests
Intensifying conflicts, protests, and escalations in different parts of the world are further compounding the global food crisis. Despite the pandemic and extreme climate events, conflicts continue to be the overarching drive of acute hunger.
Central & West Africa: Acute Food Insecurity
A record 28 million people in West and Central Africa are now experiencing acute food insecurity, and if efforts to stem the spread of hunger are not ramped up, the situation can worsen exponentially in 2022
During the harvest season (October-December 2021) in the Sahel and West Africa, 26 million people lack enough food. According to the Cadre Harmonisé (CH) report on food security, this should signal the end of the lean season. Separate data from the Integrated Food Security Phase Classification (IPC) indicates that 2 million additional Central Africans were acutely food insecure during the same period.
Severe Food Crisis in Afghanistan
In late 2021, nearly half of Afghans experienced food insecurity or worse levels of crisis- the highest level ever recorded in Afghanistan and a 37% increase over six months earlier. Nearly 9 million Afghans will experience acute food insecurity in early 2022, one step short of famine conditions.
Food shortages and rapidly rising food prices, coupled with the ongoing drought, are likely to exacerbate food insecurity in 2022. IRC assessments conducted in five provinces in mid-2021 indicated that hunger and lack of livelihoods play a major role in driving further displacement.
Food Crisis: Grim and Uncertain Future
Despite prices already sitting at 10-year highs, that upward pressure on food prices is unlikely to let up anytime soon because of a perfect storm of unpredictability, inflation, and labor problems.