Surge in Global Food Prices: The Highest in 18 Months Amid Supermarket Inflation
The global food market is potentially on the brink of another inflation shock. The benchmark for global food commodity prices saw its quickest monthly rise in 18 months in September. This surge is due to a combination of factors including conflicts in Eastern Europe and the Middle East, disrupted maritime supply chains, severe weather affecting croplands, climate change policies advocated by the far-left in the West, and unchecked central bank money printing.
The Food and Agriculture Organization of the United Nations' Food Price Index, which monitors the global prices of a selection of traded food, averaged 124.4 in September. This is a 3% increase from August and 2.1% higher compared to the same month the previous year.
Key Contributors to the Price Surge
The report by the Food and Agriculture Organization (FAO) identified sugar, wheat, and edible oil as the primary drivers of the overall price increase.
FAO's Sub-Indices Breakdown
The FAO Sugar Price Index saw the most significant increase in September, rising by 10.4 percent. This surge was attributed to deteriorating crop prospects in Brazil and worries that India's decision to lift restrictions on sugarcane use for ethanol production might affect the country's export availability.
The FAO Cereal Price Index rose by 3.0 percent during the month, primarily due to higher wheat and maize export prices. International wheat prices increased mainly because of concerns over excessively wet conditions in Canada and the European Union. However, competitively priced supplies from the Black Sea region partly offset this. World maize prices also rose, influenced by low water levels on key transportation routes along the Madeira River in Brazil and the Mississippi River in the United States. Conversely, the FAO All Rice Price Index declined by 0.7 percent, reflecting generally quiet trading activities.
The FAO Vegetable Oil Price Index increased by 4.6 percent from August, with higher quotations for palm, soy, sunflower, and rapeseed oils. The rise in international palm oil prices was due to lower-than-expected production in major Southeast Asian producing countries. The rebound in soyoil quotations was primarily due to lower-than-expected crushings in the United States.
The FAO Dairy Price Index rose by 3.8 percent in September, with quotations up for whole milk powder, skim milk powder, butter, and cheese.
The FAO Meat Price Index increased by 0.4 percent, mainly due to higher poultry meat prices driven by strong import demand for Brazil's product. World bovine and pig meat prices remained stable, while those for ovine meat declined slightly from August levels.
Warnings and Predictions
In July, Isabella Weber of the University of Massachusetts Amherst warned in a separate report that more regular supply shocks are likely for food. This indicates the urgent need for a new stabilization approach involving a buffer system to mitigate price volatility in essential commodities to promote economic stability and growth.
Around a year ago, Sara Menker, founder, and CEO of Gro Intelligence, warned in a Bloomberg interview that the current global food crisis is 'much worse than 2008'.
In late 2020, Albert Edwards of SocGen began warning about the Federal Reserve inflating bubbles during the Covid pandemic and how it could trigger a rise in food prices and the usually ongoing risks, such as socio-economic instabilities.
Bottom Line
In the US, the Biden-Harris administration has sparked some of the worst inflation in a generation, making it increasingly difficult for consumers, particularly low/mid-tier households, to afford groceries. The only solution offered by the administration was price controls.
This situation further emphasizes the need for individuals to establish their own food supply chains, whether through local sourcing or collaboration with neighbors. If possible, consider farming your own land to break free from corporate control over the processed food supply chain.
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