Lots of reasons
The food price index benchmarked by the Food and Agriculture Organization of the United Nations (FAO) rose for 12 consecutive months to 127.1 in May, the highest level in nearly 10 years. This index reflects the prices of meat, milk, cereals, canola oil and sugar. The index in May is up to 40% higher than the same period last year.
Sea freight costs are also higher due to lack of containers and supply chain disruptions. The FAO also points to supply-side reasons such as delayed harvests and reduced sugar cane production in Brazil.
The price is still increasing
Nisshin Seifun Group (Japan) is expected to increase the price of wheat flour products by 2-4% in July, due to higher raw material prices, as well as higher logistics and packaging costs.
Lower-income households and poorer countries will be hit harder, as most of their income is spent on food, he said. In addition, these countries also have less access to vaccines and lack the resources to cushion the impact of rising food prices.
Farmers, exporters benefit
Experts say that rising food prices contribute to job creation and income growth in rural areas. Nikkei Asia Citing data from the Bank of Thailand, the country’s agricultural income rose 14% in April compared with the same period last year. The net profit of agribusiness trader Wilmar International (Singapore) reached $450 million in the first quarter of 2021, nearly doubling from the same period last year. However, a prolonged pandemic and deterioration in some Asian economies could affect food supply and demand, complicating price forecasts.