The world is facing global food price inflation since 2020 as per the Food and Agricultural Organization (FAO). With food prices rising in 2021 once more, concerns about hunger and malnutrition continue to increase across the globe. World food prices rose for a seventh consecutive month and a lot of factors could have contributed to this rise in price.
The food price index measures monthly changes for a basket of cereals, oilseeds, dairy products, meat, and sugar. It is said that all components of the index rose due to strong global demand.
Significantly, results in this Real Research survey revealed that the majority of people are aware that world food prices increased for seven months straight in 2020. More so the most participants concur that global food inflation will continue in 2021.
- Most participants (80%) in the survey are aware of the global food price inflation that took place in 2020.
- According to the results, the high demand for food during the pandemic caused food prices to increase. Adding on, above 50% of the participants agree that food prices will continue to surge in 2021.
- Consumers will cut on purchasing goods if food prices continue to rise, noted the survey results. Most people will cut on wheat and other cereals.
- Notable, the most negative impact will be on general consumers
- 73% of the respondents state that a reduction in shipping prices will cause food prices to drop.
Nearly 80% Acknowledged That World Food Prices Increased in 2020
The Covid-19 pandemic negatively affected the global economy, it ushered in global food price inflation. Food price increase in 2020 caused not only strains on governments but also on household budgets. Hence, the reason why most respondents are well aware of the global food price inflation.
Global food prices rose in January for the eighth consecutive month. Leading products in the increase are cereals, vegetable oils, and sugar, according to the Food and Agriculture Organization of the United Nations (FAO). The products are generally basic commodities for most households. Thus, in general, many participants are aware of the food price increase in 2020.
The Food and Agriculture Organization (FAO) revealed that corn prices are up 45% from a year ago to $5.55 a bushel and soybeans have jumped 56% to $13.71. Wheat is up 16% while rice is 27% higher. These are just but a few examples. Though 20.74% are not aware of the food price increases, the reality is global prices have reached their highest since July 2014.
Covid-19 Pandemic Caused Food Prices to Increase
After the food price increase in 2020 most wondered what factors affected the prices of food. There are quite a number of factors, however, we decided to know which one took the most impact in the eyes of the public through our Real Research Survey.
Respondents were asked the question, ‘Why do you think the food prices increased?’. In response, the majority which comprised 45.43% noted that it was due to the high demand for food during the pandemic. Though there are also factors such as weather conditions, the global pandemic contributed majorly to the global food price inflation across the globe.
The global FAO Food Price Index showed a steep increase in 2020. Most recently, food around the world is 7.5% pricier than the 2014-2016 average. The worldwide utilization of wheat and rice are forecast to rise by 0.7% and 1.8%, respectively, during the year/s ahead.
Also, looking at what factors affect the prices of food, fluctuation in agriculture markets was also among the reasons. Retail prices of agricultural commodities have jumped sharply in the past months because of supply chain disruptions since the pandemic hit the globe. The imposition of nationwide lockdown had disrupted the national and international movement of imports.
As a result, the world continues to experience global price inflation even in 2021. Thus we are seeing food prices rising in 2021. 51.44% of the respondents think that food prices will continue to increase in 2021. There is uncertainty about the longevity of the global food price inflation. However, governments and international organizations are working to bring a solution to the problem.
42.79% to Cut on Purchasing Certain Goods
As food prices continue to increase, consumers are cutting on food items they used to purchase. 42,79% of the respondents state that lesser goods will be purchased if food prices continue to increase.
Due to job losses, work from home systems, and even homeschooling, more consumers are eating at home now more than they did in the past. There is escalated demand for food-at-home, thus, making family food costs surge. What are the rising food prices’ causes and consequences?
Families are skipping meals as they can’t afford much due to rising food prices. Additionally, instead of a balanced meal, people end up compromising on their nutritional diet. If global food price inflation continues, a lot of people will cut down on purchasing goods.
The majority of the respondents expressed that they will cut down on wheat and cereal resulting from global food price inflation. Firstly, 25.82% said they will cut on wheat and cereal. Following that is 19.86% who expressed that they will cut on dairy products. Also, 20.29% reflected a cut on meat and eggs. While 9.92 are going to reduce sugar.
The World Trade Organization (WTO) limits the amount of subsidized corn and wheat that countries can add to global stockpiles. Furthermore, global weather conditions have affected the production of wheat in some countries. All this has caused an increase in cereal and wheat products.
Global Food Price Inflation Mostly Affects General Consumers
Food prices tend to drive up due to climate change, high oil prices, government subsidies, World Trade Organization limits on stockpiles among the list. The price hike of necessary food commodities has a major impact particularly on the general consumers in the society. Ultimately, consumers will use less of any good if its price increases relatively compared to other goods. UN body warns the trajectory of prices could create a ‘big issue’ for poorer, import-reliant countries. Global food price inflation can become a big issue for less prosperous countries which depend on imports for food.
Under most circumstances, global food price inflation is likely to make consumers more sensitive or responsive to price changes. They have the opportunity to switch to similar alternatives or cut down on purchasing the goods. In most cases, it gives the consumer little choice but to stop purchasing the products. Food prices rising in 2021, have made people get what is deemed a necessity.
A Demand for Cost-effective Shipping Prices
How do you deal with rising food prices? 21.73% of the respondents state that a reduction in shipping prices will cause food prices to drop. Shipping costs involve many variables. There are also plenty of hidden costs when handling fulfillment in-house.
There isn’t a fixed price for shipping frozen food, as it depends on numerous factors. One needs to consider the shipping distance, transit duration, the weight of its packaging, and more. With less shipping during the pandemic, food prices increased. There is a need for a reduction in shipping costs in order for food prices to drop.
The Real Research survey has shown that the majority of people across the globe are aware of the price hikes in food. Additionally, the pandemic contributed most to the global food price inflation which soared in 2020. However, many government and international organizations are working together to curb the food price increase. However, the majority of respondents note that global food price inflation will continue in 2021.
|Survey Title||Awareness Survey on Rising World Food Price Index|
|Duration||March 10 – 13, 2021|
|Number of Participants||300,000|
|Demographics||Males and females, aged 19 to 60+|
|Participating Countries||Afghanistan, Algeria, American Samoa, Andorra, Angola, Argentina, Armenia, Australia, Azerbaijan…Bahrain, Bangladesh, Belarus, Belgium, Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Brazil, Brunei, Bulgaria, Cambodia, Cameroon, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cyprus, Ecuador, Egypt, El Salvador, Estonia, Ethiopia, Finland, France, Georgia, Germany, Ghana, Greece, Guatemala, Haiti, Hong Kong, India, Indonesia, Iraq, Israel, Italy, Ivory Coast, Japan, Jordan, Kenya, Kuwait, Kyrgyzstan, Laos, Latvia, Lebanon, Libya, Luxembourg, Macedonia, Madagascar, Malawi, Malaysia, Maldives, Malta, Mauritania, Mexico, Moldova, Mongolia, Morocco, Mozambique, Myanmar [Burma], Nepal, Netherlands, New Zealand, Nicaragua, Nigeria, North Korea, Oman, Pakistan, Palestine, Panama, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Rwanda, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, Somalia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Taiwan, Tajikistan, Tanzania, Thailand, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam, Yemen, Zambia, Zimbabwe