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World food prices drop after Ukraine grain pact: UN

Linda Stewart — Mon, 08 Aug 2022 09:08:48 +0000

World food prices fell sharply in July, partly thanks to a deal between Ukraine and Russia lifting a sea blockade that had stopped Ukrainian grain shipments, a UN agency has said.

Food prices soared to a record high in March after Russia invaded Ukraine, fuelling fears that the conflict would spark hunger in countries relying on their exports.

While prices remain high, they have now dropped for a fifth month in a row, falling by 8.6% in July compared to June, according to the Food and Agriculture Organization’s food price index.

The index, which measures the monthly change in international prices of a basket of food commodities, was still 13.1% higher than in July 2021.

The biggest drop was for vegetable oil prices, which fell by 19.2% between June and July to hit a 10-month low.

The cereal price index logged a monthly drop of 11.5%, the FAO said.

The decline for cereals was led by a fall in world wheat prices, “partly in reaction to the agreement reached between Ukraine and the Russian Federation to unblock Ukraine’s main Black Sea ports”, the UN agency said.

Shipments under last month’s UN-brokered deal began last week, with a first vessel carrying corn leaving Ukraine for Lebanon on Monday.

“The decline in food commodity prices from very high levels is welcome, especially when seen from a food access viewpoint,” FAO chief economist Maximo Torero said in a statement.

However, he said many uncertainties remain, pointing to high fertiliser prices, a bleak global economic outlook and currency movements.

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‘World on the brink of food crisis’, IMF chief tells Davos

Linda Stewart — Tue, 24 May 2022 15:07:54 +0000

Speaking at the World Economic Forum in Davos, Kristalina Georgieva, the IMF’s managing director, said global “anxiety around access to food at reasonable prices is hitting the roof”.

Prices for vital crops and ingredients such as wheat, maize, and vegetable oil, have soared since Russia’s invasion of Ukraine disrupted the production and transport of already harvested produce from the region. The future planting of crops is likely to be heavily disrupted.

Georgieva said: “We have had commodity price shocks in many countries. We have seen oil prices decline, but food prices continue to go up and up.

“We can shrink our use of petrol when [economic] growth slows, but we have to eat every day.”

She also said governments will need to subsidise the cost of food and energy for the poorest members of society.

Support needs to be provided “in a very targeted manner, preferably by providing subsidies directly to people”, Georgieva said.

“There are two priorities, one the very poor people, segments of society that are now struggling with high food and energy prices”.

The second, she added, is to support those businesses that have been “most damaged” by the war in Ukraine.

Achim Steiner, the administrator of the United Nations Development Programme (UNDP), also voiced his concerns over food security at Davos.

He said: “We are in trouble. The war in Ukraine is dramatic in so many ways. There is an acute crisis in food, fuel and finance. As of today, there is no reason to believe this is a short-term challenge.

“We are in the middle of a series of unfolding crises and the world is not prepared for it.”

Steiner said 200 million people are facing acute hunger, double the figure of five years ago.

European Commission President Ursula von der Leyen said at Davos that Europe needs to seek talks with Russia on the possibility of reviving the exports of wheat and other food supplies out of Ukraine in order to prevent the aforementioned crisis.

“It can’t be in Russia’s interests that because of Russia people are dying of hunger in the world. Therefore, I think we should first of all look at the dialogue with Russia, whether there is not an agreement that this wheat gets out of Ukraine,” she said.

A group of 50 economists surveyed by the World Economic Forum said the world is heading for its worst food crisis on record, with countries in sub-Saharan Africa, the Middle East and north Africa likely to be the worst affected.

Against this backdrop, a raft of global institutions – including the IMF and the World Bank – announced last week that they had developed a multi-billion-dollar “action plan” to address food security, particularly in developing countries.

Speaking in the German city of Bonn as G7 talks took place, US Treasury Secretary Janet Yellen said: “Russia’s war against Ukraine has exacerbated the issue of food security for people around the world, particularly in emerging and developing countries.

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Global food prices hit new 10-year high: UN

Linda Stewart — Fri, 05 Nov 2021 10:41:51 +0000

Global food prices have hit the highest level in over a decade after rising by more than 30% in the last year, according to the United Nations Food and Agriculture Organization (FAO).

The agency’s figures revealed that vegetable oil prices hit a record high after rising by almost 10% in October, fuelled by disruptions to supplies, high commodity prices, factory closures and political tensions.

The FAO said its measure of cereal prices was up by more than 22% compared to a year earlier.

The price of wheat was one of the major reasons for this rise, up almost 40% in the last 12 months after major exporters including Canada, Russia and the US reported poor harvests.

“In the case of cereals, we’re facing a situation where one could say it’s climate change which is ultimately causing falling production,” Peter Batt, an agribusiness expert at Curtin Business School told the BBC.

“We’ve had pretty bad years [of harvests] in a lot of places.”

Vegetable oil

The FAO said its index of vegetable oil prices was pushed up by rises in the cost of palm, soy, sunflower and rapeseed oils.

Palm oil prices have risen after output from Malaysia was “subdued” due to ongoing shortages of migrant workers, the FAO said.

Mr Batt said: “The other problem that has emerged is getting the product out. For example, here in Australia we’ve had a lot of ships arrive to take the food away but we can’t get crew to come in because of Covid.”

Shipping disruptions are also pushing up milk prices, with the cost of dairy products rising by almost 16% over the last year.

Brigit Busicchia from Macquarie University said speculation on global markets is also contributing to price volatility: “Since the 1990s, the deregulation of commodity futures trading has made it possible for institutional investors to enter this market on a large scale.”

This is having a particular impact on countries which rely on food imports, she said.

“Expect countries like Egypt or other Middle Eastern countries to experience tensions in their provisioning of cereals,” she said.

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