Global food prices have seen their first increase in months due to recent developments in Ukraine and India. After Russia withdrew from an agreement that allowed Ukraine to export grain, and India restricted some rice exports, the UN Food and Agriculture Organization (FAO) reported a 1.3 percent rise in the FAO Food Price Index for July compared to June. This index tracks changes in the prices of commonly traded food commodities worldwide.
Commodity prices had been falling after reaching record highs last year following Russia’s invasion of Ukraine. The disruption in supplies from these countries contributed to a global food crisis, particularly affecting regions in Africa, the Middle East, and Asia where many people struggle with hunger.
The situation worsened when Russia exited a deal in July that protected ships carrying Ukraine’s agricultural products through the Black Sea. Attacks on Ukrainian ports and grain infrastructure further affected wheat and corn prices on global markets.
In addition to this, India’s trade ban on some varieties of non-Basmati white rice led to hoarding in some regions. This ban came as El Niño brought drier and warmer weather, posing a threat to rice production.
As a result of these developments, international wheat prices rose for the first time in nine months, and rice prices reached their highest level since September 2011, with a 2.8 percent increase in July.
Moreover, vegetable oil prices jumped 12.1 percent in July after seven months of decline, driven by a 15 percent surge in sunflower oil prices due to supply uncertainties following the end of the grain deal.
While there are adequate food supplies globally, challenges from conflict, export restrictions, and weather-induced production shortfalls can lead to supply imbalances and increased food insecurity. These rising prices may have a significant impact on food security, especially for the most vulnerable populations who spend a larger portion of their income on food.
It’s important to note that local food prices in many developing countries are still rising due to weakened currencies against the dollar, which is used to purchase grain and vegetable oil. Despite falling prices on world markets, the relief has not yet reached households, making the transition to lower prices for consumers slower than expected.