While global food shortages seen during the last few years have mostly been resolved, we’re yet to see solutions that would guarantee the long-term security of the global food markets.
It’s a constant talking point at gatherings such as Davos or G20, but besides commitments regarding several underdeveloped areas, things seem to move quite slowly. A positive example is the Black Sea Grain Initiative, brokered by Turkey in 2022, which allowed for significant volumes of commercial food exports from three key Ukrainian ports in the Black Sea. The UN plan helped stabilize spiraling food prices worldwide and staved off famine. A single action, though, was and isn’t sufficient.
According to UN data, global prices of wheat and maize reached record highs last year and the average value of vegetable oils hit a new record, while individual indexes for dairy and meat prices also marked their highest full-year levels since 1990. There is some good news, though: the latest Food Price Index (FFPI) by the UN showed an average of 132.4 points in December, which is 1% lower than the one in December 2021. But the situation remains volatile, as this figure is more than 14% higher than the average value recorded in 2021.
Another worrisome figure, easily attributable to ongoing conflicts, is the continuous decline of global food inventories. The World Bank’s aggregate stocks-to-use ratio for food commodities (a measure of supply relative to consumption) was down to 27% as per November 2021 data. We should again put this into context: when compared to the 2017 record of 30.6%, the decline seems steep; but when measured against the record low of 17.2%, seen in 2006-2007, the value seems high. So while each of these figures can be looked at from a different perspective, the reality is that global mechanisms aimed at stabilizing the global food markets should be put into place sooner rather than later.
What’s our take? Let me know at bogdan.angheluta@trade.media.