Food Prices Soar Amid Russia Invasion Of Ukraine

Consumers already feeling the pressure of high food prices are about to get another shock following more increases that are set to come as a direct impact from the war between Russia and Ukraine.

The Food Price Index, reported by the Food and Agriculture Organization (FAO) of the United Nations, indicated on Thursday that the price of food, specifically vegetable oils and dairy products, reached an all-time high in February due to the escalating conflict. Overall, the index averaged 140.7 points in February, up 3.9% from January and 24.1% compared to a year ago.

However, “the February reading only partly incorporates market effects stemming from the conflict in Ukraine,” a press release about the rise in prices stated, because the effects of the conflict are still unfolding, and the full extent is yet to be determined.

Increases include a 3% rise in the price of cereal, with international maize prices up 5.1% in part because of the “uncertainty about maize exports from Ukraine.” While the FAO Food Price index predicts wheat and maize production will rise in 2022, the situation in Ukraine makes those predictions uncertain.

The International Fund for Agricultural Development (IFAD) warned on Thursday about the effect on global food production and supply chain from the Ukraine crisis.

“This area of the Black Sea plays a major role in the global food system, exporting at least 12% of the food calories traded in the world,” a statement read. “Forty percent of wheat and corn exports from Ukraine go to the Middle East and Africa.”

The report notes that disruptions from the COVID-19 pandemic were making the food and hunger crisis around the world worse, and the situation in Ukraine is placing more strain on the supply chain.

“The greatest risk facing global supply chains has shifted from the pandemic to the Russia-Ukraine military conflict and the geopolitical and economic uncertainties it has created,” Moody’s Analytics economist Tim Uy said, according to CNN. “A new challenge has emerged where the endgame is not clear.”