Avoiding the pain of food inflation

The world has been grappling with more than two years of global supply chain problems caused by the Covid-19 pandemic, the fallout from the Russian war, and extreme weather brought about by climate change. Consumers around the world are suffering the consequences of skyrocketing prices. There’s a lot of uncertainty, and things are on track to get even worse.

A Bloomberg report said drought is shrinking crops from the US Farm Belt to China’s Yangtze River basin, ratcheting up fears of global hunger and weighing on the outlook for inflation. It said the latest warning flare comes out of the American Midwest, where some corn is so parched stalks are missing ears of grain and soybean pods are fewer and smaller than usual. The dismal report from the Pro Farmer Crop Tour has helped lift a gauge of grain prices back to the highest level since June.

Corn is the most dominant crop in the US, and Bloomberg said a lackluster harvest will have ripple effects across the global food supply chain, adding pressure on South America to produce bumper crops early next year. That’s especially the case if China, which is suffering its worst drought since the early 1960s, is forced to import more grains to feed its massive livestock herds and shore up domestic inventories.

According to a new Harris Poll commissioned by Bayer, 90 percent of Americans are currently concerned with inflation and the increasing price of goods and services. The impact of the global food crisis is apparent across the country’s grocery stores. The Harris Poll survey revealed that 87 percent of Americans are particularly concerned about the rising cost of groceries. Sparse shelves are amplifying these worries, with 76 percent of respondents indicating they are seeing more empty shelves at grocery stores now than at the beginning of 2022.

From the Associated Press: “Six months after Russia invaded Ukraine, the consequences are posing a devastating threat to the global economy. High food prices and shortages, worsened by the cutoff of fertilizer and grain shipments from Ukraine and Russia that are slowly resuming, could produce widespread hunger and unrest in the developing world. The UN Development Program said rising food and energy prices threw 71 million people worldwide into poverty in the first three months of the war. Countries in the Balkans and sub-Saharan Africa were hit hardest. Up to 181 million people in 41 countries could suffer a hunger crisis this year, the UN Food and Agriculture Organization has projected.”

Russia’s war led the International Monetary Fund last month to downgrade its outlook for the global economy for the fourth time in under a year, the AP report said. The lending agency expects 3.2 percent growth this year, down from the 4.9 percent it forecast in July 2021 and well below a vigorous 6.1 percent last year. “The world may soon be teetering on the edge of a global recession, only two years after the last one,” said Pierre-Olivier Gourinchas, the IMF’s chief economist.

Like most developing countries, the Philippines is also facing skyrocketing food inflation. And the Marcos administration seems to have limited policy options in the near term because the country is the most food insecure Asean member due to our reliance on food importation. The good news is that President Marcos promised in his SONA to “work double time to address the gap in food supply and spike in prices.”

For the long-term, the President said the production of various agricultural commodities will be improved through an enhanced value chain system from production to retail. He said the Department of Agriculture will extend financial assistance and provide farm inputs to food producers, which the government will procure in bulk. These will include fertilizer, pesticides, seeds, as well as fuel subsidy and other interventions.

We know that in bad times, food-exporting countries may stop or limit shipments to have enough food for their citizens. We should have learned our lesson. Let’s give the President and Agriculture chief a chance to strengthen the country’s food security and address the issue of high food prices in the country.

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