According to the United Nations Food and Agricultural Organization (FAO), the global prices of the food commodities like rice, dairy, meat, sugar and vegetable oil rose. It is for the first time in months following the collapse of the UN and Turkey brokered agreement to ship grain from war-torn Ukraine port to the rest of the world.
The Food Price Index of the FAO, which tracks the monthly variations in the international prices of commonly traded food commodities, indicated an increase of 1.3 percent in July over June. Predominantly driven by the rising cost of rice and vegetable oil.
🔴The latest @FAO Food Price Index is out!
Global food commodity prices rose in July, influenced by the termination of the Black Sea Grain Initiative and new trade restrictions on rice.https://t.co/wuPRM9DIAe
— FAO Newsroom (@FAOnews) August 4, 2023
Furthermore, wheat prices rose for the first time in the last nine months because of uncertainty over exports from Ukraine and persistent dry conditions in North America.
Prices of commodities have been falling since hitting record highs last year in the wake of Russia’s invasion of Ukraine. Disrupted supplies from the two major supplier countries exacerbated a global food crisis, especially in nations in parts of Africa, the Middle East and Asia where millions are struggling with hunger.
There are new risks and challenges after pulling out from the Black Sea arrangement that provided protection for ships carrying agricultural produce from Ukraine through the Black Sea route. Along with several attacks on Ukrainian ports and grain infrastructure facilities have been impacting global markets.
How does the position of India change the dynamics?
The Indian government imposed a ban on non-basmati white rice after retail rice prices rose to 3 percent following significantly late but heavy monsoon rains which caused considerable damage to the crops.
Rice prices rose by 2.8 percent in July and by around 19.7 percent over the last year after India prohibited exports.
Higher rice prices “raises substantial food security concerns for a large swath of the world population, especially those that are poorest and who dedicate a large share of their incomes to purchasing food,” the FAO cautioned.
Meanwhile, Torero, the chief economist of the FAO shed light upon the challenges to supply chains: “While the world has adequate food supplies, challenges to supplies from major producers due to conflict, export restrictions or weather-induced production shortfalls can lead to supply and demand imbalances across regions.”
That will eventually lead to a “lack of food access because of increasing prices and potential food insecurity.”