Global Food Prices Set for Surge as Wars and El Niño Bite
Food prices are expected to surge globally due to a perfect storm of higher costs and lower crop yields caused by wars in Iran and Ukraine, as well as El Niño. According to Maximo Torero, chief economist at the United Nations Food and Agriculture Organization (FAO), commodity prices will start increasing soon, leading to food price increases by the end of this year and next year.
Torero pointed out that while some commodity prices have risen in recent months, they still reflect good harvests rather than likely difficulties in the coming year. However, the Strait of Hormuz is a significant problem affecting all agricultural inputs, including Brent oil and natural gas used for pumping, packaging, processing, and transportation.
The damage inflicted by Ukraine on Russia's oil and gas infrastructure has curtailed the export market for diesel and natural gas, key inputs in food production. As commodity prices are global, this affects countries worldwide, even if richer nations have more cash to buffer producers.