Global food prices likely to rise further says WTO

Food prices rose 18% globally last year, including a 21% increase in the cost of grains, the World Trade Organization (WTO) estimated in its Global Trade Outlook published Wednesday (5).

According to the trade body, fertilizer prices registered an even greater increase of 63% from the previous year.

The WTO noted that, in theory, higher food costs “should encourage more agricultural production, resulting in greater availability and lower food prices in the future,” but warned that the shift away from expensive fertilizers could lead to reduced crop yields and ultimately new price spikes.

The organization also noted that food prices fluctuated sharply in 2022, first jumping 19% between January and May, after Russia’s military operation in Ukraine began, and then falling 15% between May and December.

Overall, while “global food supplies are less precarious than many feared” concerning the Ukraine crisis, they “remain a cause for concern,” the WTO warned.

According to its calculations, the volume of world trade in wheat, for example, has fallen by about 7.5% since 2021, which leaves “little margin for error if a major producer suffers a crop failure or a weather-related natural disaster.”

On Wednesday, WTO Director-General Ngozi Okonjo-Iweala called on developed economies to watch for signs of the food crisis causing hunger in poorer countries.

She reiterated her previous calls to lift export restrictions on food and fertilizer, noting that as of April 2023, some 67 countries had such restrictions.

She also warned that global trade will likely “remain under pressure from external factors in 2023.”

She said this includes the crisis in Ukraine and other geopolitical tensions, inflation, and the impact of monetary policy tightening.

“This makes it even more important for governments to avoid trade fragmentation and refrain from introducing barriers to trade.”

“Investing in multilateral cooperation on trade…would strengthen economic growth and people’s living standards in the long run,” she concluded.

With information from Gazeta Brasil