Rising Food Prices Risk Making the Covid Hunger Crisis Worse
(Bloomberg) -- Soaring costs for food staples are hitting at a time when some countries can ill afford it, risking exacerbating inequalities wrought by the Covid-19 pandemic.
A gauge of global food prices has climbed to a six-year high and may have further to run as a Chinese crop-buying spree and adverse weather bolsters markets. While costs remain below peaks seen in 2008 and 2011, the bigger bills come as economies grapple with the fallout from the coronavirus crisis, with millions out of work, tourism scarce and remittances low.
That’s stretching budgets in import-dependent countries and also making it costlier to provide food aid, said Arif Husain, chief economist at the United Nations’ World Food Programme in Rome. Protectionist policies emerging in key agricultural suppliers like Russia -- buoying wheat prices-- are also spurring worries about a potential “copycat effect” if other shippers follow, he said.
“For places which are already suppressed and depressed in the sense of economic activity, it’s going to be quite troubling,” Husain said in an interview.
Last year, even as food supplies appeared ample, the WFP warned that 270 million people faced hunger across the countries it operates in. That’s an increase of more than 80% from before the pandemic began. Since then, the International Grains Council has pared its estimate of global stockpiles to a five-year low, and prices are also picking up for vegetable oils and dairy.
The pandemic risks increasing economic inequality in nearly every country at once, the first time that’s happened in records spanning a century, charity Oxfam said this week. In tandem, nations including Venezuela, Zambia and Ghana are facing rapid food inflation.
The WFP, the recipient of last year’s Nobel Peace Prize, has appealed for about $15 billion to provide aid in 2021. The current situation is different than previous crises like 2008, when buyers were squeezed by rising costs for both food and fuel, Husain said.
“This is really a different kind of double whammy,” he said. “You’re not only getting hit by the supply-side issues and constraints, but also on the demand side because purchasing power has disappeared.”
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