×

We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now
The war has wreaked havoc on supply chains in the crucial Black Sea breadbasket region. Stock photo.
The war has wreaked havoc on supply chains in the crucial Black Sea breadbasket region. Stock photo.
Image: 123RF/Asawin Klabma

Global food prices are surging at the fastest pace ever as the war in Ukraine chokes crop supplies, piling more inflationary pain on consumers and worsening a global hunger crisis.

The war has wreaked havoc on supply chains in the crucial Black Sea breadbasket region, upending global trade flows and fuelling panic about shortages of key staples such as wheat and cooking oils.

That’s sent food prices — already surging before the conflict started — to a record, with a UN index of world costs soaring another 13% last month.

Ukraine’s ports are closed and many vessels are avoiding the region, which accounts for about a quarter of all grains trade. Farmers in Ukraine, the top sunflower-oil exporter, are expected to drastically cut crop plantings and the country is struggling to export supplies already harvested.

Global food prices are surging at the fastest pace ever as the war in Ukraine chokes crop supplies, piling more inflationary pain on consumers and worsening a global hunger crisis.
Global food prices are surging at the fastest pace ever as the war in Ukraine chokes crop supplies, piling more inflationary pain on consumers and worsening a global hunger crisis.
Image: Bloomberg

Elsewhere in the world, high energy and fertiliser prices are raising food-production costs, which is feeding through to bigger grocery bills or threatening output.

The food price rally is felt most in poor countries where groceries make up a large share of consumer budgets — and the fallout from Russia’s invasion has sent costs of basic foods such as bread soaring.

The  costs are spurring some countries to hold off on imports, seek new suppliers or draw down local stockpiles, though that won’t be a long-term fix, said Erin Collier, an economist at the UN’s Food and Agriculture Organisation.

“It’s basically kind of deterring demand,” she said. “That can only last for so long. Wheat is a staple food.”

Global prices have jumped about 75% since mid-2020

The FAO’s gauge of global prices has jumped about 75% since mid-2020, eclipsing levels seen in 2008 and 2011 that contributed to global food crises. Last month’s surge helped prices round out a seventh straight quarterly gain, the longest such run since 2008.

The UN has warned that prices could still climb much more.

Aside from the food-supply risks associated with the war in Ukraine, farmers around the world continue to contend with severe weather events and the effect of climate change.

The FAO raised its outlook for global grain stockpiles — usually a good sign for supplies — but said most of that is due to stranded grain in the Black Sea region.

Ukraine’s exports will be particularly hard hit by the war, with wheat shipments falling 5-million tonnes and maize down 12.5-million tonnes from a previous estimate. Freight and financing challenges are also impairing Russian sales.

The problems will drag into the next season. Ukraine planted its wheat months before the war erupted, and the FAO expects at least 20% to go uncollected because of destruction, constrained access to fields or a lack of resources for harvests.

Russian production could be affected by difficulties importing agricultural inputs, it said.

More stories like this are available on bloomberg.com
Bloomberg

subscribe