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Global Food Inflation and Food Crisis: Causes and Consequences

The Looming Global Food Crisis: Understanding the Reasons and Ways to Resolve

Introduction

Food is a basic need for every living creature including human being. The world is witnessing an increasing trend of food crisis. It's a crisis that puts millions of people, particularly those who are already in vulnerable conditions in great and long-lasting trouble. In this real-time blog post, we will explore the reasons behind this crisis and the possible ways of improvement. It is essential to view this issue from a humanitarian perspective to assess the full extent of its consequences and initiatives towards solutions that can help minimizing the suffering.

Past performance suggests slowing growth in agricultural productivity may lead to higher prices in global commodity markets. Higher food prices are especially costly to low-income households, who already spend a large share of their income on food. Historical improvement in agricultural productivity led to declines in inflation-adjusted commodity prices of an average of 1 percent a year from 1900 through 2000 even as world population tripled. Since the turn of the millennium, however, agricultural prices have trended higher, driven by multiple forces including increased food and biofuel demand, rising input prices (such as for fertilizer) and slowing productivity.

The two world’s largest exporters of wheat and other crucial crops are in war for about one and half years. Many vulnerable countries are facing heightened food insecurity which include fragile and conflict-affected nations.

Causes and Consequences

1. Climate Change: There are numerous factors contributing to the global deceleration in agricultural productivity growth. Weather disturbances linked to climate change, such as droughts, heatwaves, or flooding, can lead to reduced crop yields. Over time, these impacts accumulate as rising temperatures and more frequent adverse weather events result in increasingly substantial reductions in productivity. Furthermore, climate change has the potential to alter global production patterns. This means that crops once well-suited for a specific region may become unsuitable due to changing agro-ecological conditions, including shifts in seasonality, temperature, and precipitation, making them better suited for other regions.

The chart below shows a consistent decline of per capita cereal production:

2. Crop Failures: Climate change is contributing to more frequent and severe crop failures. Prolonged heatwaves and erratic rainfall patterns affect crop yields and increase the risk of food shortages. Rising temperatures and changing precipitation patterns can lead to reduced crop yields. For example, corn yields in the United States have been affected by heat stress, which has a cascading effect on global food prices. Wheat and sunflower production in Ukraine are almost in a halt due to war since 2022.

The Food and Agriculture Organization (FAO) reported that global food prices rose for almost 15 consecutive months in May 2023. Key staples such as corn, wheat, and soybean showed price increases.

The emergence of novel or resistant forms of crop diseases and pests, like citrus greening, fall armyworm, and herbicide-resistant "super" weeds, is also of concern as it hampers productivity gains. These new threats to crop yields may necessitate the use of additional resources such as labor and chemicals to control their spread. Long-term solutions might require innovative research and development efforts to create technology-based solutions adaptable to specific production environments.

3. Water Scarcity: The world's freshwater resources are dwindling due to overuse and pollution. Without adequate water for irrigation, agriculture becomes increasingly challenging, leading to food scarcity.

As of 2021, the United Nations estimated that by 2050, up to 5 billion people could be living in areas with water scarcity. Additionally, agriculture consumes around 70% of global freshwater resources.

Water scarcity affects crop irrigation, leading to decreased agricultural productivity. Without adequate water resources, it becomes difficult to grow sufficient crops to meet food demand.

The sluggish diffusion of improved agricultural technologies among producers remains a pivotal issue affecting Total Factor Productivity (TFP) growth. This problem is particularly acute in developing countries, where inadequate agricultural extension systems, limited access to financial and insurance services, and insecure land tenure may collectively reduce the incentives for producers to invest in new technologies. Among developed nations, policies and public sentiment towards innovations like genetically modified crops may hinder the adoption of productivity-enhancing breakthroughs. For instance, the cultivation of genetically modified crops is rarely permitted in the European Union. Moreover, many cutting-edge precision agriculture technologies necessitate reliable satellite, cellular, and internet infrastructure, which is lacking in many rural areas globally.

4. Supply Chain Disruptions: Supply chain disruptions have been reported across various sectors, including agriculture, manufacturing, and transportation. For example, data from the World Shipping Council indicates that container shipping schedules have been disrupted by the pandemic and after that Russia – Ukraine war.

Supply chain disruptions have led to delays in food distribution and increased costs, affecting food availability and affordability.

While these reasons collectively contribute to the global food crisis, it's essential to note that real-time data, policies, and global events continue to shape the evolving situation. The food crisis highlights the need for concerted efforts in addressing climate change, conflict, and promoting sustainable agricultural practices to ensure food security for vulnerable populations worldwide.

5. Rising Food Prices: The cost of food has been steadily increasing. High food prices put a strain on the budgets of vulnerable populations, making it difficult for them to afford essential nourishment.

The FAO Food Price Index shows an upward trend in global food prices, influenced by factors like climate change, supply chain disruptions, Russia – Ukraine war and increasing demand. This trend has continued into 2023.

According to Latest Update – October 16, 2023 of IMF and the World Bank

“Domestic food price inflation remains high. Inflation higher than 5% is experienced in 57.9% of low-income countries, 86.4% of lower-middle-income countries, and 62% of upper-middle-income countries and many experiencing double-digit inflation. In addition, 67.3% of high-income countries are experiencing high food price inflation. The most-affected countries are in Africa, North America, Latin America, South Asia, Europe, and Central Asia. In real terms, food price inflation exceeded overall inflation in 78% of 163 countries.”

Rising food prices strain household budgets and affect the purchasing power of vulnerable populations, increasing the risk of food insecurity.


Country-wise Impact of the Global Food Crisis

1. Sub-Saharan Africa: Many countries in this region already face food insecurity due to political instability, conflict, and climate change. The food crisis exacerbates existing problems, making it harder for these nations to feed their populations.

The data suggest that the interaction between drought and declining agricultural capacity (which includes population growth) may be explosive, dangerous and costly by 2030. Current agricultural capacity and rainfall trends may produce an increase in food aid expenditures within a decade with an obvious possibility to increase in food insecurity in Africa.

2. Yemen: Yemen is grappling with one of the most severe food crises globally. Years of conflict have disrupted food production and distribution. Millions of Yemenis rely on humanitarian assistance to avoid starvation.

3. Haiti: This Caribbean nation has experienced a perfect storm of problems, from political instability to natural disasters. With a significant portion of the population already undernourished, Haiti faces an urgent food crisis.

4. Venezuela: Political and economic instability has led to hyperinflation, making food unaffordable for many. Malnutrition is rampant among children, and the crisis shows no signs of abating.

5. Syria: The ongoing conflict in Syria has disrupted agriculture, causing food prices to soar. Millions of Syrians rely on humanitarian aid to meet their basic food needs.

6. India: India is currently grappling with food inflation and reduced food security due to a shortage of essentials like edible oils and pulses. Climate change-induced weather patterns, such as unseasonal rains and heatwaves, have disrupted crop production.

7. Afghanistan: Years of conflict have crippled agriculture and exacerbated food insecurity. The humanitarian crisis in Afghanistan is a glaring reminder of the far-reaching impact of a food crisis.



Substantial reductions in annual production is probable for Southern and Central America, Western and Eastern Africa, and Southern and Eastern Asia. Middle Africa and central Asia may exhibit similar tendencies. Projected 2030 yields in Central America, Western and Eastern Africa, and Southern Asia remain below 4,000 kg ha−1 annum−1.

Many other countries are also following the same trend and the situations are worsening instead of improvement.

The Humanitarian Perspective

1. Impact on Vulnerable Communities: It's crucial to remember that the primary victims of the global food crisis are vulnerable communities, including children, the elderly, and those already suffering from malnutrition.

2. Long-term Consequences: Food shortages can lead to lasting health issues. Malnourishment during childhood can result in stunted growth, cognitive impairments, and lifelong health problems.

3. Humanitarian Aid: Humanitarian organizations are working tirelessly to provide food assistance to those in need. Their efforts are crucial in mitigating the suffering caused by this crisis.

4. Need for International Cooperation: The global nature of the food crisis necessitates international cooperation. Governments, organizations, and individuals must work together to address the root causes and provide emergency relief.

5. Sustainable Solutions: In the long term, sustainable solutions are needed. This includes addressing climate change, supporting small-scale farmers, and investing in resilient agriculture practices.

Conclusion

It appears quite certain that the world will experience significant reductions in food availability as consumption demands increase due to biofuels and rising living standards.

Present food security crisis will continue to accelerate, robbing millions of people of their potential livelihoods. Food security and agricultural production are not directly linked. Politics, economics and access are also critical issues. In countries that experience significant levels of hunger, however, productive capacity is an important constraint, made more salient by increasing food price volatility. Investment in further productive capacity in regions with growing populations remains a challenge.

Climate change, conflict, and economic instability are pushing many nations to the brink of severe food shortages. As global citizens, it's our responsibility to view this issue from a humanitarian perspective and work collectively to alleviate suffering. This includes supporting humanitarian organizations, advocating for climate action, and pressuring governments to prioritize food security. The global food crisis is a wake-up call, and it's up to us to respond with empathy, solidarity, and action.

Sources:

International Agricultural Productivity, by Keith Fuglie, Jeremy Jelliffe, and Stephen Morgan, USDA, Economic Research Service, September 2023

Agricultural Research Investment and Policy Reform in High-Income Countries, by Paul Heisey and Keith Fuglie, ERS, May 2018

"Harvesting Prosperity: Technology and Productivity Growth in Agriculture", World Bank, 2019

"New Perspectives on Farm Size and Productivity", Food Policy, 2019

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