Why Are Food Prices on the Rise?

Even as the vaccines have started rolling out, the COVID-19 pandemic is ravaging countries, and its effects has spilled over into a global food crisis. Global food prices reached a six-year high in December and are likely to keep rising into 2021. The unfortunate pandemic has caused a global food crisis. Global food prices increased in December 2020 and are likely to keep rising into 2021, adding pressure on household budgets while hunger surges around the world (Durisin and Sousa,2021).

This has altered the spending patterns of the consumers in the USA. The price of groceries increased overall by 2.6% in the April of 2020 (Goldman, 2020). Wheat prices have risen to 37% and corn prices increased by 61%. Both are the highest in years. Moreover, the Consumer Price Index, an indicator that measures the average change of prices over time has risen by 3.7% compared to a year ago (White,2020).

Firstly, due to Covid-19, there are trade disruptions. Due to this there have been shortages of food in different parts of the world. As a common demand-supply concept, when there are shortages of the product the prices will increase automatically. Decades of food policy which encouraged the development of a food system which is interconnected. Today 80% of the world’s population is fed by imports (Clapp, 2020). Lockdown measures in different parts of the world have severely affected food supply chains. Producers who grow specialized crops for distant global supply chains have been vulnerable.

The second reason is that most of the commercial and industrial food production is labour intensive. As workers got infected with the virus, it affected the production and processing stages of food. The situation got so severe in the UK that companies were looking for domestic workers (Clapp and Mosely, 2020), Meatpacking plants became hotspots of the virus. In the USA, over 30,000 meatpacking workers have contracted the virus and over 120 workers have died (Chadde,2020). This reflected In the prices of meat products as well. In the USA, there was a rise of 3.7% (Bronner, 2020).

Thirdly, as protection of workers becomes of utmost importance, the companies needed to invest in the protection equipment. Grocery retailers also faced the same situation. Along with these extra workers were hired to ensure SOP. This all added into the costs, which was passed to the customers.

Now the increase in prices has major implications in emerging markets as compared to developing countries. This is because people in emerging markets spend more on food. Along with this unemployment has skyrocketed. Although, this is a global phenomenon but in the developed countries there are safety nets but in the developing countries non-existence of safety nets has made it more difficult for people to have food. Is there any end to this increase in prices as vaccines are in the market? According to Phil Lempert, founder of SupermarketGuru.com says that food prices are going to continue to rise for probably a year, year, and a half.

Lastly, as the cases continue to increase it is very important for the governments around the world to stabilize the food prices so that there is no increase in food crises in the short term and long term. Governments and aid organizations should help local food suppliers so that food prices can be stable.

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About the Author

Suhaib Shaukat

Suhaib is currently doing Foundations at the University of Nottingham, Malaysia. He loves to read about politics and business. He hopes to serve the public in future and wants to become a civil servant in the future. Suhaib also serves at IGNITE (UNM Student Magazine) as a News Editor.

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References:

Goldman, D.(2020) Grocery Prices are soaring. Here’s what’s getting more expensive [online].Atlanta: CNN. Available at: https://edition.cnn.com/2020/05/13/business/grocery-prices/index.html

Clapp, J. and Mosely, W. (2020) This food crises is different: COVID-19 and the fragility of the neoliberal food security order. The Journal of Peasant Studies [online] https://doi.org/10.1080/03066150.2020.1823838

Redman, R.(2020) FMI helps consumers understand rising grocery prices amid pandemic [online]. New York: Supermarket News. Available at: https://www.supermarketnews.com/issues-trends/fmi-helps-consumers-understand-rising-grocery-prices-amid-pandemic

Sousa, A. and Durisin, M (2021) Global Food Prices at Six -Year High Are Set to Keep on Climbing [online]. New York: Bloomberg. Available at: https://www.bloomberg.com/news/articles/2021-01-07/global-food-prices-at-six-year-high-are-set-to-keep-on-climbing

White, M (2021) The price of food and gas is creeping higher – and will stay that way for a while [online]. New York: NBC News. Available at: https://www.nbcnews.com/business/business-news/price-food-gas-creeping-higher-will-stay-way-while-n1259206

Buchholz, K (2021) Food got more expensive in 2020.[online]. Geneva: World Economic Forum. Available at: https://www.weforum.org/agenda/2021/01/global-food-prices-rising-2020/

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