The factors lifting prices could persist even as we returns to pre-pandemic norms. The world’s poorest will bear the highest cost.
By Bloomberg Opinion
July 13, 2021, 6:00 PM EDT
The cost of feeding the world is the most expensive it’s been in years. The Food and Agriculture Organization’s food price index, which tracks a basket of grains, vegetable oils, meat, dairy and sugar, rose to its highest level in a decade in May.
On the Chicago Mercantile Exchange, the prices of soybean oil is more than double what it was a year ago, while lean hogs and ethanol are up by about three-quarters. The same dynamic is affecting corn, palm oil, coffee, sugar and a host of other commodities. Even the price of moving food around the world is surging: The Baltic Handysize Index, which tracks freight rates on the ships used for hauling grains between continents, is at levels last seen in 2008.
Prices of major agricultural commodities have surged over the past 12 months
Food prices have always been cyclical, and most agricultural futures are now off their peaks from early May. Even the FAO’s food price index fell marginally last month, after a year of back-to-back increases. Still, there’s reason to believe the current disruptions won’t disappear immediately as the world returns to pre-pandemic norms. China’s hunger for protein as incomes rise, combined with the lingering effects of African Swine Fever, isn’t going to disappear overnight. Moreover, even a short bout of food inflation can be damaging for the world’s poorest, who are rarely more than a few meals away from hunger.