In September 2021, global food prices have soared 33% in relation to the same period of the previous year, as revealed by the monthly food price index of the United Nations Food Organization (FAO, for its acronym in English), which also indicates that global prices are They have increased by 3% since last July, reaching levels that had not been seen since 2011.

The food price index It is designed to reflect the combined effect of price changes on a range of food products including, but not limited to, vegetable oils, grains, meat and sugar, and to compare them on a monthly basis. It converts real prices to an index, relative to the average of the price levels between the years 2002 and 2004. It is a standardized source to monitor food prices (denominated as nominal prices, that is, they are not adjusted to inflation).

Inflation causes a rise in prices that is not proportional to wages and income

While nominal prices indicate the monetary cost of purchasing food in the market, prices adjusted for inflation (what economists call real prices) are much more important for food security, that is, for how easy it is for people to access adequate food. The prices of all goods and services tend to rise faster than average incomes (although not always). Inflation not only implies that buyers have to pay more per feed unit (because its nominal price has increased), but also that proportionally they have less money to spend in food products, since it also produces an increase in the prices of everything else, with the exception of their wages and other income.

In August, I analyzed the FAO Inflation-Adjusted Food Price Index and found that global real prices were actually Taller than they were in 2011, when food price riots contributed to the overthrow of the governments of Libya and Egypt.

FAO

Nominal prices are currently lower than in 2011, but real prices are higher. Alastair Smith / FAO data, provided by the Author.

Based on actual prices today, it is more difficult to buy food on the international market than it has ever been since the United Nations (UN) began taking records in 1961. The only two exceptions are the years 1974 and 1975. Those two peaks in food prices occurred at the same time as the oil price spike that took place in 1973, which drove inflation in many sectors of the United States. the global economy, including food production and distribution.

So what is currently driving food prices to historic levels?

Oil prices, bad weather and COVID-19

The factors that drive food price averages internationally are always complex. The prices of the different products rise and fall as a function of global factors, as well as variables specific to each product and each region.

For example, the increase in the price of oil that began in April 2020 has influenced the prices of all products included in the FAO index, increasing production and transport costs. The lack of manpower As a result of the COVID pandemic, the availability of workers to grow, harvest, process and distribute food has reduced, which is another cause of the rise in product prices globally.

Supermarket

In truth, the real price has been increasing since 2000, reversing the previous trend of constant decline that had been taking place since the 1960s. Despite global efforts (which have responded in part to the goals set by both the UN Millennium Development Goals and the consequent Sustainable Development Goals to reduce hunger), this rise in the price of food has made it less and less accessible.

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It cannot be said that a specific product has been solely responsible for the increase in the average real price since 2000. However, the price index of edible oil crops has increased significantly since March 2020, mainly driven by the 16.9% increase in the price of vegetable oils between 2019 and 2020. According to FAO crop reports, this increase is due to the growing demand for oil. biodiesel and unfavorable weather conditions.

Food prices

Food oil prices have recently reached their highest in 20 years. Alastair Smith / FAO data.

Another of the categories that is influencing the total increase in the price of food is sugar. In this case, again, the unfavorable weather conditions, including the damage caused by frost in Brazil, have reduced supply and increased prices.

Although cereals They have contributed to a lesser extent to the rise in prices, the truth is that their availability worldwide is particularly important for food security. Wheat, barley, corn, sorghum and rice represent more than 50% of the global diet, a percentage that increases to 80% in the poorest countries. Stock reserves for these crops have been shrinking since 2017, as demand exceeds supply. The depletion of reserves It has helped stabilize world markets, but it has also contributed to prices increasing significantly since 2019.

Market

Again, the reasons for individual fluctuations are complicated. However, it is worth paying attention to the number of times since 2000 FAO has reported that “unfavorable weather conditions“Or” unpredictable “have caused a” reduction in expected harvests “, a” effect on crops due to weather conditions “and a” reduction in production “.

Europeans may worry about the price of pasta as droughts in Canada reduce wheat harvests. However, as the real price index for cereals approaches the levels that in 2011 caused the riots over the increase in the price of bread to turn into popular uprisings, it is urgent to analyze how communities in the lesser regions can prosperous cope with these tensions and thus prevent disturbances from occurring.

Our technological capacity and our socio-economic organization cannot successfully manage unfavorable climatic conditions and unpredictable. Now we should imagine what the food supply might look like in a world with 2ºC warmer temperatures, an option that is currently considered increasingly likely according to the most recent reports of the Intergovernmental Panel on Climate Change.

Without radical changes, the climate collapse it will continue to reduce international access to imported food, and it will do so at levels much higher than any historical precedent. Higher prices will reduce food security. And if there is an infallible social law, it is the one that states that hungry people take radical decisions to secure their livelihoods, especially in cases where they perceive that leaders are failing them.

Author: Alastair Smith, Senior Lecturer Researcher in Global Sustainable Development, University of Warwick.

This article was originally published on The Conversation. You can read the original article here.

Translated by Jaime Caballero.

Photos | Unsplash
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