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War, Protectionism and Climate Change Inflate Global Food Prices

16 June 2022 by Lan Ha, Euromonitor International

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Part of this article first appeared in the Korean business magazine, Chosun Economy, on 1 June 2022, in an interview with Lan Ha on global food prices.

The prices of food commodities are rising, hitting economies, manufacturers and consumers worldwide. Food inflationary pressures are likely to remain high in 2022 and beyond, as some pandemic-induced supply bottlenecks remain, while Russia’s invasion of Ukraine added a major supply shock and a wave of export restrictions emerged. Furthermore, climate change impacts will continue to threaten agricultural yields and food security.

COVID-19 pandemic and war in Ukraine are major factors driving up global food prices

The global increase in food commodity prices had already started during the global COVID-19 pandemic in 2020-2021. In 2021, the global wheat price (in USD per metric ton) increased by 36.1% over the previous year. This was driven by growing demand for home consumption, coupled with supply chain bottlenecks, including labour shortages, factory closures, port congestion, and higher transportation prices that occurred during the pandemic, leading to higher input costs for food producers.

The war in Ukraine since February 2022 has caused another big shock by further disrupting the global supply of food, given the role of both Russia and Ukraine as major global wheat producers, accelerating pressures on food prices. In 2021, the two countries provided 14.7% of the world’s total wheat production. Following Russia’s invasion of Ukraine, the global wheat price jumped by 12.5% in March 2022 compared with February 2022. The overall global food index (2010=100) hit a record level of 159 in April 2022, significantly up from 141 in February 2022.

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Source: Euromonitor International from World Bank

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