FOOD PRICES are coming off their highs. Earlier in the year Russia’s invasion of Ukraine sent prices soaring as a blockade of Ukraine’s southern ports choked off grain exports. In mid-July a UN-brokered agreement saw the resumption of grain shipments from Ukraine, easing global prices. But as one crisis abates, another emerges. Hot, dry summers in Europe and America are crimping the supply of some grains. In July the UN’s Food Price Index, which measures international prices across a basket of commodities, found that the cost of food dropped by around 9%. New figures for August show a more modest fall, of around 2%.
The good news is that food prices in August returned to levels last seen before Russia began its blockade of Ukrainian ports. In the past month Ukraine has shipped more than 1.6m tonnes of foodstuffs, mainly maize, wheat and oilseeds, via the Black Sea. Grain exports (including shipments by canal, road, rail and sea) reached almost 3m tonnes in August, around two-thirds of the pre-war average (see chart). Total agricultural exports are expected to rise to more than 6m tonnes in October. This should ease pressure on prices.
But heatwaves and droughts in Europe and parts of America are still taking a toll. Last month the European Commission estimated that maize yields for 2022 would be down by 16% on the average of the past five years, and 8.6% lower than predicted in July. France expects its smallest maize harvest so far this century. America’s Department of Agriculture forecasts a 5% annual drop in maize production. Such curbs in supply will weigh on prices.
And despite the recent falls, the cost of food staples remains eye-wateringly high. The UN index is up by 8% from August last year, and 34% on the August average over the previous five years. Cereals and oils have become especially dear: over the past year they cost an average of 45% and 93% respectively more than the average over the previous five years. Unlike the port blockade, the impact of global warming on food supplies is likely to last. ■