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Price Spikes in the Food System – and whom they affect

The recent drought, bad harvests, double-digit inflations, and war have affected all of us badly. Some, however, have been hit worse than others – and those differences come systematically.

The reasons for the recent supply crunch and skyrocketing inflations globally are plenty: there is, of course, the ongoing consequences of climate change, all too obvious in destroyed harvests, barren fields that used to be fertile, and droughts that result in wildfires and dried up rivers. The COVID pandemic has been an additional factor in the disruption of supply chains, productivity and affordability of food staples. Then, there is the ongoing war in Ukraine – paired with trade blockades and severed economic ties, this had a huge impact on many countries dependent on Russian and Ukrainian export products.

Russia and Ukraine usually export 19 % and 10 % of globally traded wheat respectively. Their usual customers include Egypt, Indonesia, Bangladesh, Pakistan, Azerbaijan and Turkey. According to the UN Food and Agriculture Organization, at least 24 low and lower-middle income countries import more than 50 kg of wheat or corn per capita annually.

Many farmers in those nations can’t live off of their own fields, instead, they rely on imported produce as well.

Although Ukraine is slowly picking up international trade again, the aftermath will be felt for a long time.

As a result of the war on Ukraine, combined with global inflations, it is suspected 40 million additional people could be pushed into extreme poverty. This is one more spike after the crisis years of 2007 and 2010 that already pushed several hundreds of millions of people into extreme poverty.

Extreme poverty, according to the World Bank, means earning an equal of $ 1.90 or less per day.

This also implies that households in low-income countries use up to half their income just for buying food. As of right now, around 27 countries fall under the term “low-income country”. Among those are many African states like Ethiopia, Nigeria, and South Sudan, but also Asian countries, for example Afghanistan and the Yemen.

Especially the Yemen has been hit harshly during the past months. Prices of wheat, flour, cooking oil, eggs and sugar have all increased by more than a THIRD since March. Cooking oil, for example, has reached an inflation of 45 %! The Yemen normally imports roughly 90 % of its needed produce from Ukraine – 42 % of it being wheat, a basic staple. Without it, the country experiences an acute food crisis. Around 56 % of the 4 million displaced people within the country have no source of income at all – so, also no food budget. Generally, over 3 quarters of those people are female or minors. Many on food stamps receive half or less of their needed daily calories, since there is plainly not enough funding nor supplies. 

CARE figured that 150 million more women than men went hungry in 2021.

According to the UN, around 2.3 billion people experienced some form of food insecurity in 2021, with 12 % being severely malnutritioned. 

All of these issues combined with overall food scarcity have led to an incredible spike in food prices – and especially for already vulnerable groups this has been unbearable.  Before the Coronavirus crisis, around 135 million people suffered from severe hunger already. Since then, this number has more than DOUBLED to 345 million. A sad record number – which is only expected to further grow in 2022.

There have been voices that ask for a removal of environmental protection guidelines in agriculture to increase production and combat the ongoing crisis. There is, however, also the fear of opening Pandora’s box and not being able to return to these principles once the worst has been overcome – setting back environmental efforts by decades. Also, around 32 countries globally lack proper food safety network programmes, instead, people there depend on private aid systems (which mostly chronically lack funding). There’s still dire need for public, well-structured relief systems. 

With this, we have to ask the following questions:

  • How will we use the disposable resources globally to feed as many as possible?
  • How can prices fluctuate without affecting the poorest among us first?
  • How can produce be distributed fairly on a global scale?

These are big-scale questions that can only be solved on a global level. This affects all of us – this food system ties all of us together!