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Food Inflation – Causes and Remedies
News: Food prices around the world have soared to record levels this year as the Russia-Ukraine war slashes key exports of wheat and fertilizer from those countries, and at the same time events such as droughts, floods and heat fueled by climate change claim more harvests.
Causes of Food Inflation:
• Russia-Ukraine Conflict – They supply around 30% of global wheat exports, but due to the war they have fallen considerably.
• High Stock of Wheat – National stocks of wheat mostly eaten in the countries where it is grown remain relatively high. But the drop in exports from Russia and Ukraine has driven up competition for the remaining wheat on the global market, leading to higher costs that are particularly painful for poorer, debtridden countries that rely heavily on imports.
• Since the last food price crises of 2007-2008 and 2011-2012, governments have failed to curb excessive speculation and ensure transparency of food stocks and commodity markets.
• Improving Grain storage infrastructure especially in countries highly reliant on imports and helping those countries grow more staple food at home.
• Planting a wider variety of crops in order to reduce dependence on just a few grains could boost food security.
• Because a large share of the world’s grain goes to feeding livestock, persuading people to eat less meat and dairy could boost grain supplies dramatically. The global shortage of cereals on export markets this year is expected to be 20-25 million tonnes – but if Europeans alone cut their consumption of animal products by 10%, they could reduce demand by 18-19 million tonnes.
• Investing in climate smart-farming, to protect harvests as the planet warms, would help shore up global food supplies.
• Stepping up domestic production is the only way to contain the effects of ‘importing’ food inflation.