The pandemic has been a source of economic stress for several industries globally, resulting in mass inflation and government intervention in order to alleviate the harmful effects of such rises in costs. A global index that the United Nations Food and Agricultural Organization performed found that food prices in January 2022 were at their highest level since 2011 when Egypt and Libya experienced political uprisings. Former Chief Economist at the International Monetary Fund (IMF), Maurice Obstfeld claims that it “wasn’t much of an exaggeration” to say that the world is approaching a significant global food crisis. Developing economies are experiencing some of the most severe increases in prices, which has detrimental effects on populations in poverty. Here is some information about how increases in food prices cause concern for the poor.
About the Food Crisis
Increases in food prices are not limited to one food industry. Foods are experiencing massive increases in prices. Cereal prices have increased 12.5% and dairy has increased 18.7%. From April 2020 to December 2021, the price of soybeans has risen 52% and coffee prices have risen 70% due to the pandemic. Supply chain issues have caused a struggle, especially for economies with high demands that are import-based during the pandemic. Spikes in all costs of goods are related to one another, which is evident in the rising oil prices.
Oil prices have risen to levels comparable to the oil crisis during the 1990s, which has raised food costs due to the energy industry’s involvement in transporting and producing food. Extreme weather conditions could be a factor determining food prices. For example, Brazil has undergone harsh droughts that prevent coffee beans from flourishing. Uncontrollable factors that target the poor have largely driven the food crisis.
How Those in Poverty are Most at Risk
Unfortunately, the nations that the increases in food prices have affected the most are the most vulnerable to economic crises and have large populations in poverty. According to World Vision, food prices rose by an average of 2.9% in the U.K., 3.6% in the U.S. and 4.8% in Japan and Canada between February 2020 and July 2021. On the other hand, prices increased in countries such as Myanmar which had price increases of 54% and Timor-Leste, which experienced increases of 17.7%. The nations have reported high levels of poverty during the pandemic, with more than 3 billion people not having access to healthy foods.
Food insecurity is running rampant in developing countries, while the United States is surviving flawlessly in comparison. One can see such disabilities simply in how the average citizens of each region spend their money. According to the IMF, people in Latin America and Africa are expected to spend 50%-60% of their wages on food while people in the United States spend about one-seventh of their income on food. A rise in food prices means that Latin American and African citizens will have to spend extremely large sums of their income on food.
A Nature food study found that by the end of 2022, more than 283,000 children under the age of 5 years old could perish from malnutrition as a result of this food crisis and 13.6 million children suffer from acute malnutrition. Certain areas in poverty in Asia do not suffer the implications of the increases in food prices because of their plentiful grains. However, Africa, South America and the Middle East region are most likely to feel the effects of food shortages because they are heavily dependent on food imports.
In addition, low-income nations including Brazil, Argentina and Turkey have suffered due to currency depreciation against the dollar, which is the standard for international food commodity prices. In Africa, bad weather and conflicts in the Dominican Republic of Congo (DRC), Ethiopia, Nigeria and more have disrupted transportation routes and risen food prices. Developing nations are most at risk for increases in food prices, disproportionately affecting poorer global populations rather than populations in high-income countries.
Ways to Drive Down Food Prices
The pandemic is a special case of increases in food prices. However, there are at least two meaningful ways that could prevent massive spikes in food prices in the near future.
- Change global rules on food trade. Many governments are not as ambitious as they could be in reforming trade policies to prepare for price spikes. Measures that could reform trade include banning export restrictions on food staples while increasing individual government’s support for farmers domestically through new rules that protect producers in other nations. This would benefit food price stability and increase the predictability of the market to better prepare governments for changing prices.
- Increase public investment in farming and agriculture. A study from Cornell University found that if the United States increased public investment by $33 billion, hunger could reach a resolution. If other nations contributed to this effort, global poverty rates could swiftly reduce. Africa is especially in need of such kinds of investment, which is one of the nations that increases in food prices have affected.
The global increases in food prices rightly cause some serious concerns about food insecurity, especially for residents of developing nations that are in poverty. There are ways to create positive change to prevent crises from occurring again. Nations should concentrate on providing food to their citizens in need and high-income countries must prioritize the lives of the hungry abroad and domestically.
– Rachel Reardon