Highest food prices ever recorded in 10 years with a 28% jump in 2021. While prices in the food price index fell in December, vegetable oil prices continued to surge.
World Food Prices Surge 28% in 2021
Worldwide economies struggle to recover from COVID-19, especially countries that rely on imports. The highest food prices recorded last in 2011 were 125.7.
Senior FAO economist Abdolreza Abbassian said, “While normally high prices are expected to give way to increased production, the high cost of inputs, ongoing global pandemic, and ever more uncertain climate conditions leave little room for optimism about a return to more stable market conditions even in 2022.”
The spike in inflation due to high food prices affects economies across the globe. The food agency is skeptical if the pricing pressures will ease in 2022.
What is the cause of the hike in food prices?
The oilseed market is severely affected by the floods in Malaysia and the drought wreaking havoc in South America. The EPA must scale back its quotas for renewable diesel in 2022 as asked by the American Bakers Association.
Senior ABA Vice President Lee Sanders said, “The EPA’s proposed increase could jeopardize the ability of our members to meet the constant demand of providing millions of baked goods to grocery stores, restaurants, and federal feeding programs.” “That’s because soybean oil, a critical ingredient for bakers, has been increasingly diverted away from the food supply chain and toward the production of advanced biofuels.”
Droughts across Europe and Canada caused a severe cutback in global rapeseed stockpiles. Rapeseed prices nearly doubled in 2021, with North American canola and Paris rapeseed futures hitting an all-time high on Friday.
How are food prices surging worldwide?
Since rapeseed growers in Europe phased out chemicals, they became growingly reliant on oilseed imports.
Paris-based farm adviser Agritel analyst Arthur Portier said, “The situation is really tight, and the buyers are still there.”
Friday saw the highest intraday surge since 2009 in Paris rapeseed up to 5.9% and North American Canola to 1.5%.
The food and Agriculture Organization has issued warnings to import-reliant countries about higher food costs. The highest food prices recorded in 10 years will increase the poorer populations at risk.
How is the world combating the highest food price recorded in 10 years?
Global head of grain futures at ED&F Man Capital Markets Inc. in Chicago, Charlie Sernatinger, said that Canadian farmers are likely to increase canola plantation as wheat prices reduce.
On the other hand, government data shows both France and Germany have increased plantings. Combined worldwide efforts could improve the situation later in 2022.
Impact of highest food prices
The pandemic has led to severe travel restrictions, increasing demand with low supplies. Food insecurity is affecting countries like South Sudan, the Central African Republic, and the continent as a whole.
The worldwide hike in food prices has led people to modify their diets and opt for cheap-priced commodities. Lack of nutrition and the insecurity of the next meal are widely spreading across the globe.
The pandemic, climate change, weather conditions, and political reasons are collectively responsible for the highest food prices recorded in 10 years.