August 17, 2022

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Sharp decline in food prices after the grain deal, but remains high |  Currently

Sharp decline in food prices after the grain deal, but remains high | Currently

Global food prices fell further in July. Earlier this year, they reached record levels as a result of the war in Ukraine. The price of grain in particular fell, after grain ships from Ukrainian ports again sailed through the Black Sea to Turkey. However, food prices remain high. As a result, an increasing proportion of people’s disposable income is spent on food, and poor countries are threatened with a food crisis.

The United Nations’ global food cost index fell by nearly 9 percent last month. The index fell to its lowest level since January, a month before the Russian invasion of Ukraine. Global food prices skyrocketed after the February invasion, with Ukraine and Russia both being major grain exporters.

The two warring countries together account for an estimated one-third of world wheat exports. After the invasion, many countries began to boycott Russian goods, while goods such as grain could no longer leave Ukraine due to the blockade of the ports.

On the initiative of Turkish President Recep Tayyip Erdogan, and after months of negotiations, an agreement was reached between Ukraine, Russia, Turkey and the United Nations on the resumption of shipping to and from Ukrainian ports. Since then, many cargo ships have left Ukrainian ports as part of this international grain deal. Better-than-expected corn crops in Argentina and Brazil also contributed to lower prices in July.

The UN Food Index is based on the world market export prices of commodities such as grain and does not take into account the prices that consumers have to pay in stores. For example, Swiss food producer Nestle raised its prices in the second quarter due to higher energy and transportation costs.

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So consumers still have to deal with the high prices in stores for their food products. Tens of millions of people face hunger in poor countries and the Sahel region is facing its worst food crisis in a decade.