We’ve been reporting on inflation, and with that reporting, we’ve also been reporting on the price of food climbing as well. A new report via the Rome-based Food and Agriculture Organization (FAO) shows that prices of food across the earth are skyrocketing and August saw the biggest jump in nearly a decades.
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Tyler Durden has the story.
Central banks and mainstream media continue to peddle the notion that soaring food inflation is temporary and the average Joe and Jane should not worry about it. But in a new report via the Rome-based Food and Agriculture Organization (FAO), global food prices are on the rise, once again, and back to near-decade highs.
FAO released a statement Thursday that detailed after two consecutive months of declines, world food prices in August jumped due to solid gains in sugar, vegetable oils, and cereals.
FAO’s food price index, which follows international prices of globally traded food commodities, averaged 127.4 points in August, up 3.9 points (3.1%) from July and 31.5 points (32.9%) from the same period last year.
In August, the most significant driver of food prices was FAO Sugar Price Index, which jumped 9.6% from July due to frost damage to crops in Brazil, the world’s largest sugar exporter. Readers may recall in “Frost Bites Brazilian Sugar Crop As Prices Zoom Higher,” we noted multiple weather disasters in Brazil severely damaged the sugar crop.
The second-largest jump in the basket was the FAO Vegetable Oil Price Index, which rose 6.7% last month, as international palm oil prices soared to historic highs because of below-potential production.
The FAO Cereal Price Index increased 3.4% higher in August versus July. The meat index edged up slightly in August, and the dairy index sunk.
A combination of global droughts, volatile weather, labor shortages, and supply chain disruptions persisting from COVID, among others, have contributed to the rapid rise in food prices over the last year.
Heading into fall, soaring food inflation shows no signs of abating and may worsen. This may cause socio-economic turmoil in emerging market economies, mainly because people in those countries allocate more of their daily budgets to food.
SocGen’s Albert Edwards first warned about soaring food inflation last December ahead of the big rally in food prices in a note that we titled “Why Albert Edwards Is Starting To Panic About Soaring Food Prices.” He said a driver of food inflation has been the global central bank’s ultra-loose monetary policy and warns about uprisings in underdeveloped countries.
In first-world countries like the US and Europe, surging food inflation hasn’t become a big deal yet, for consumers but may start to irritate the working-poor this fall when supermarket prices are expected to jump.
Food inflation globally has been ultra-low for the last few decades. Now food prices are soaring, and this could be an indication once the Federal Reserve begins tapering that bond yields will only go up.
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Natural News added:
Malaysia, which is the world’s second-largest producer of palm oil, is facing a perfect storm in production that will likely drag stocks to their lowest levels in five years.
More than half a dozen plantation owners also said that lack of workers forced them to extend their harvesting windows from 14 days to as many as 40 days, which compromises the quality of fruit and risks the loss of some parts of the bunches.
“It is especially bad in Sarawak. Some companies are seeing production falling by 50% because of the shortage of harvesters,” a plantation manager, who requested to remain anonymous, said.
The combination of global droughts, volatile weather, labor shortages, and supply chain disruptions have all contributed to the rapid rise in food prices over the past year. There are no signs of food inflation slowing down any time soon, and this could cause socio-economic turmoil in emerging market economies. (Related: Is there any end to skyrocketing food prices?)
First-world countries like the United States and Europe haven’t been affected as much yet, but consumers may start to see the difference as supermarket prices are expected to jump in the fall.
Even as restaurants and other businesses re-open in the U.S. and parts of Europe, the delta variant is spreading in places such as Southeast Asia, which curbs primary production. Effects of the pandemic are also still causing problems. For instance, COVID outbreaks continue, forcing temporary closures and border restrictions. In some places, there are also problems with local issues such as dangerous conditions brought about by record U.S. heatwaves.
Soybeans, for instance, have been severely affected by the drought, and the USDA lowered its production forecast by 1.8 million tons in August compared to the previous month. This is expected to cut U.S. soybean stocks to eight-year lows, and soy oil exports to decade lows.
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Mary Villareal says Abdolreza Abbassian, a senior economist at FAO, expects prices to continue to rise.
“High prices are usually the best solution for high prices in that farmers, producers respond. But of late, there’s a new factor with less control than the past, and that is the weather situation.”
Oscar Tjakra, a senior analyst at food and agribusiness research at Rabobank said that everyone along the supply chain is absorbing some of the higher costs, and that it is expected to continue next year.
Global consumers are already facing economic uncertainties due to the COVID-19 pandemic; however, further increases in edible oil prices will take a toll on many livelihoods.
Moreover, the shortage of workers threatens to further add costs, whether through wage increases or supply shortfalls. This is not expected to end with the pandemic, either: workers employed in the agricultural sector have been falling for decades.
Several countries have already recorded big jumps in fool inflation costs in the past months, and the price pressure may continue to rise as edible oil costs are passed on by suppliers, leaving consumers with little choice, but to pay up for staple goods.
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