“A giant leap.”
That’s how the UN’s food and agriculture organization described the latest monthly increase in a closely-watched gauge of global food prices.
The FAO index rose an astounding 18 points last month (figure on the left, below) amid Russia’s military incursion in Ukraine, which drove up the price of commodities and imperiled exports of key foodstuffs from “Europe’s breadbasket.”
The 12.6% increase was the largest in history. And it wasn’t close (figure on the right, above).
This constitutes an emergency. Food insecurity was already part of the macro zeitgeist amid soaring inflation tied to any number of pandemic effects, from supply chain disruptions to the impact of “too much” stimulus in developed markets. The conflict in Ukraine turned a bonfire into a five-alarm blaze.
The component breakdown showed the cereal gauge rose to a record high (figure on the left, below). “This month’s increase reflected a surge in world prices of wheat and coarse grains, largely driven by conflict-related export disruptions from Ukraine and, to a lesser extent, Russia,” the FAO said, adding that “the expected loss of exports from the Black Sea exacerbated the already tight global availability of wheat.”
The figure on the right (above) shows the percent increases on both the cereals index and a gauge that tracks vegetable oils. Commenting on the dramatic increase in the oil index, the FAO noted that “international sunflower seed oil quotations increased substantially in March, fueled by reduced export supplies amid the ongoing conflict in the Black Sea region.”
That, in turn, had knock-on effects. “Palm, soy and rapeseed oil prices also rose markedly, buoyed by rising global import demand in the wake of sunflower oil supply disruptions,” the report said.
According to Roman Slaston, director general of the Ukrainian Agribusiness Club, local farmers are planting less corn due to export constraints, turning instead to more soybeans and sunflowers.
Farmers, Slaston said during a Thursday webinar, worry logistics may remain disrupted for the foreseeable future.
H-Man, third world countries will bear the weight of this cross. While people in the US may go hungry at night, people in the third world will starve to death. We may have a humanitarian crisis in the making that overshadows Ukraine
I think that if you factor in the increasing effects of climate change you are understating the coming crisis.