Food prices are on the rise again due to the end of the cereals agreement (FAO)

2023-08-04 11:01:00

This is the fear of many countries in Africa and the Middle East that depend on Ukrainian cereals to feed their population: to see food prices go up. In July, world food prices rebounded slightly, for the second time this year, the Food and Agriculture Organization of the United Nations (FAO) said on Friday, blaming the rise on the end of the agreement on grain exports via the Black Sea.

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The FAO food price index, which reflects the change in international prices of a basket of basic commodities, shows an increase of 1.3% compared to June, its second and largest increase in the index. ‘year. This price index nevertheless remains well below its level of a year ago (-11.8%).

The end of the cereal agreement called into question

This reversal holds first “to renewed uncertainties regarding exports” since Moscow’s choice last month to break the agreement which allowed Ukraine to continue to export its cereals by sea despite the war on its soil. Russia is now bombing the Ukrainian ports of Reni and Izmail on the Danube, increasing the threat to the transport of agricultural commodities. “The bombing of Ukrainian grain ports poses a major risk to prices and global food security”, explained on Wednesday to the Tribune Arthur Portier, consultant at Agritel.

“Rising prices will be felt more acutely by people in developing countries”, also alerted the Under-Secretary-General for Humanitarian Affairs of the United Nations in the Security Council, Martin Griffiths, adding that at present 362 million people in 69 countries were in need of humanitarian aid. For him, the end of the agreement “raises the risk of seeing millions of people affected by hunger, or even worse”. And to add that “Some people will go hungry, others will suffer starvation, and many may die because of these decisions”.

“In the coming months, we will be able to ensure free deliveries of 25 to 50,000 tonnes of cereals to Burkina Faso, Zimbabwe, Mali, Somalia, the Central African Republic and Eritrea”for his part affirmed at the end of July Vladimir Putin in his opening speech of the Russia-Africa summit, broadcast on Russian television.

Rise in rice following India’s export ban

The main foodstuffs on the rise, vegetable oils led this rebound with an increase of 12.1% over one month, following seven consecutive months of decline. Other factors have driven prices higher globally, in particular yield concerns in some of the major palm, soybean and rapeseed producing countries for rising prices of the corresponding oils.

Rice prices also rose by +2.8% over one month, reaching their highest, at current prices, for twelve years. The FAO points here to the measures of India, which provides 40% of world trade and banned the export of non-basmati white rice from July 21 to protect its supply and contain the rise in prices on the domestic market. This decision ” further amplified the pressure already exerted on prices by tight seasonal supply and demand of the Asian market, specifies the FAO.

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On the other hand, prices are cooling on other commodities: that of sugar fell for the second month in a row (-3.9%), the FAO cereal price index fell by 0.5% in one month due to larger maize harvests in Argentina and Brazil and potentially higher production than anticipated ” in the USA. The wheat price index meanwhile rose for the first time in nine months on uncertainty over Ukrainian wheat exports. The price indices for dairy products and meat fell slightly (-0.4% and -0.3% respectively).