Here's an idea of just how much pricier
the basics have become.
According to the UN's global Food Price
Index, in the last year the cost of
cereals went up almost 13%.
Meat 17%.
Sugar is up 20% and vegetable
oil shot up 34%.
Now there's a lot that goes into the
price of food. Take, for example, a tomato.
To grow one farmers will usually use
fertiliser and pesticides. To harvest
they need workers, equipment and fuel.
And then the tomato needs transporting
to wherever it's being sold.
With processed food—say something like a
frozen pizza—there's even more going on.
Ingredients might need importing from
around the world.
Plus, it needs to be made, packaged and
distributed.
Now what's been
happening over the last year or so is
that all those costs that go into food
have been going up.
It's inflation—price hikes across the
board that feed into each other.
So, you've got this backdrop of
rising inflation, and then when it comes
to food prices, there are some other big
things going on right now, too. Let's
start with supply chains.
We're basically talking about all the
cogs in the system of production,
distribution,
transport and retail. But right now the
global supply chain is a mess, mostly
because of the pandemic, which caused a
big and sudden shift in production and
consumption patterns.
Then, when COVID lockdowns lifted, there
was a surge in demand for all kinds of
things.
Right now the shipping industry is maxed
out, and there's a shortage of containers.
When it comes to food, it's causing
delays in transporting bulk products
like grains and sugar.
All those delays, problems and
bottlenecks are affecting supplies and
pushing prices up.
Remember, too, that there are
people involved at every stage of the
food supply chain who were also affected
by the pandemic.
A lot of people couldn't work because
they had COVID, or were isolating.
Some workers were sacked, others quit,
switched jobs or retired early. Some were
locked out of countries where they
worked.
Take the palm oil industry in Malaysia
as just one example.
OK,so those are the main
supply chain problems. Then there's
energy prices. They've gone up, too,
especially the cost of oil and gas.
And that affects the food industry in
lots of ways. To start with, most
fertilisers rely on chemicals like
nitrogen and ammonia and they're made
with natural gas, which now costs more.
Higher fuel prices mean getting anything
anywhere is more expensive, and that cost
increase is usually passed on to
consumers. Another side effect of high
energy prices is that some farmers—
especially in countries like the US,
Brazil and Germany—have a bigger
incentive to shift from food production
to fuel production.
Then, on top of all of
this, you've got bad weather. Things like
droughts, floods and extreme temperatures.
Climate change is a big part of it.
So those are some of the more universal
factors affecting food prices. But each
country also has its own set of issues,
like the state of its economy and what
the government may be doing in the food
sector. Things like taxes on food imports
or subsidies to keep prices down for
consumers. In Turkey, for example, people
are dealing with a seriously weak
currency.
Last year the lira lost 40% of
its value against the dollar.
That means anything that Turkey imports
is way more expensive, including food and
things used to produce food.
Turkey is just one
example where things are particularly
tough right now. But the poorest being
hit the hardest, well, that applies
everywhere because in general people
with lower incomes spend a much bigger
proportion of their income on food. And
when something as essential as food
suddenly becomes unaffordable, well, we've
seen what can happen.
So governments are under
pressure, and many are scrambling to
figure out how to respond right now. But
those global issues we talked about that
are pushing food prices up, they don't
look like they're going away anytime
soon, and a lot of people all around the
world are really feeling it.
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