Farm produce

How Hike in Food Prices May Trigger Global Crisis

NEWS DIGEST – Over time there has been a major spike in good prices. The hike in prices may trigger a global crisis that will drive millions more into extreme poverty, magnifying hunger and malnutrition.

The war in Ukraine, supply chain disruptions, and the continued economic disability of the COVID-19 pandemic is a major factor resulting in a major hike in food prices.

Rising food prices have a greater impact on people in low- and middle-income countries since they spend a larger share of their income on food than people in high-income countries.

According to world bank data, as of July 29, 2022, the Agricultural Price Index is 19% higher than in January 2021. Maize and wheat prices are 16% and 22% higher, respectively, compared to January 2021, while rice prices are about 14% lower.

Domestic food price inflation remains high around the world. Between March and June 2022, data shows high inflation in almost all low- and middle-income countries; 93.8% of low-income countries, 89.1% of lower-middle-income countries, and 89% of upper-middle-income countries have seen inflation levels above 5%, with many experiencing double-digit inflation. The share of high-income countries with high inflation has also increased sharply, with about 78.6% experiencing high food price inflation.

According to the World Bank’s April 2022 Commodity Markets Outlook, the war in Ukraine has caused a standstill in the global patterns of trade, production, and consumption of commodities in ways that will keep prices at historically high levels through the end of 2024 exacerbating food insecurity and inflation.

Food prices have been rising before the war, but the war is driving even higher prices. Commodities that have been most affected are wheat, maize, edible oils, and fertilizers.

Global commodity markets face upside risks through the following channels: reduction in grain supplies, higher energy prices, higher fertilizer prices, and trade disruption due to the shutting down of major ports.

Over the coming months, a major challenge will be access to fertilizers which may impact food production across many crops in different regions. Russia and Belarus are major fertilizer exporters, accounting for 38% of potassic fertilizers, 17% of compound fertilizers, and 15% of nitrogenous fertilizers.

The head of the World Bank Group, International Monetary Fund, United Nations World Food Programme and World Trade Organization released a joint statement calling on the international community for urgent action to address food insecurity, keep trade open and support vulnerable countries, including by providing financing to meet the most urgent needs.

Globally, the hunger level is at an alarming rate. According to the 2022 State of Food Insecurity in the World (SOFI) report, the number of people affected by hunger rose in 2021 to 828 million, an increase of about 46 million since 2020 and 150 million since 2019, before the outbreak of the COVID-19 pandemic. In addition, WFP and FAO warned that acute food insecurity could worsen in 20 countries or areas from June to September 2022.

Increase in Bread Production

In July 2022, the association of Nigerian bakers warned that bread prices might increase by 20% amid surging production costs.

Due to the high cost of production, they have warned against a reduction in increase.

According to Chief Baker, Thomas Odey, he said, “The planned increment is not even enough, this is because the price of every means of production has increased from condiments to diesel and all other raw materials,” Odey said.

“This is a global issue that is not peculiar to Nigeria or materials for baking alone, but the price of every foodstuff has increased significantly.

In my contacts with big flour mills in the country, they will tell you the Russia/Ukraine crisis, exchange rate and the issue of sourcing foreign currency are posing major challenges and increasing the price of wheat flour.”

Odey further said the use of cassava and potato flour was an option. Still, the challenge was that the specific species of cassava needed for good flour production was not sufficient in Nigeria.

Nigerian minimum wage is below the source of living

In Nigeria, the minimum cost of living is above the minimum wage due to high inflation rates. Nigeria’s minimum wage was set at N30,000.00 in April 2019 by the Federal Government, and it has remained the same over the years.

The minimum cost of healthy living for an adult per month at the beginning of 2022 stood at N40, 980.00 in Nigeria.

The report shows that Nigeria’s minimum wage is less than the minimum cost of healthy living by 36.60 per cent. The difference indicates that many Nigerians are malnourished and poor.

Life has become unbearable for many individuals and families because they can no longer feed themselves due to the high prices of foodstuff in the market as Prices increase every other market day.

High food prices have been a problem in Nigeria, but the current situation is biting hard on the nerves of many Nigerians.

Many Nigerians are poorer than in 2019; N90,000.00 cannot buy the same quantity of foodstuff they got at N30,000.00 in 2019. Many Nigerians have intensified their groaning following the daily pressure of the high cost of living.

In Nigeria, the high prices of food items have eroded the income of the people. The salaries of many workers have not increased to match increases in prices. Many individuals and families need financial help to augment their meagre income.

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