World food prices jump with the highest rise in a decade

World food prices rose in May in a decade, with the latest sign of a rise food inflation, which has already risen as a result of the Covid-19 pandemic.

China’s growing appetite for grain and soybeans, a severe drought in Brazil and the demand for vegetable oil for biodiesel have made the monthly food price index of the United Nations for Food and Agriculture grew 40% in May compared to the same period last year.

This is the biggest jump since June 2011, when the index rose 41%. The increase also brings the key benchmark for internationally listed agricultural raw materials to their highest level since September 2011.

Rising world market prices will further increase food price inflation, especially among the poorest countries that depend on commodity imports.

In 2020, global food price inflation rose to 6.3%, from 4.6% in 2019, according to the FAO.

The pandemic disrupted food supply chains, affecting food production and distribution, with South Asia, sub-Saharan Africa and Latin America among the most affected regions.

Bad weather in Brazil, a major exporter of corn and soybeans, and growing demand for soybean oil for biodiesel have pushed prices up, analysts said.

“China has continued to buy, but with Brazil’s drought being more severe than expected, everyone should pray for good weather in the United States,” said Abdolreza Abbassian, FAO’s senior economist.

Countries that depend on their commodities from foreign producers have been affected by higher world food prices. The issue has become a political concern in some developing countries, such as Ethiopia and Nigeria.

Some exporting countries have introduced an export tariff, such as Russia for its wheat sales, while others such as Argentina are discussing a controversial ban on beef exports.

In developed countries, the cost of raw materials represents only a portion of the overall price paid for products in the supermarket or restaurants.

But rising commodity prices are leading to higher food prices, with companies like Nestlé and Coca-Cola announcing that they will impact price increases.

The opening of restaurants as closures are facilitated will add to the food bill, Abbassian said. “The decline in eating away from home wasn’t fully offset by eating at home, but as people start going to restaurants, you’ll see food prices go up,” he said.