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Ukraine war tilts produce prices closer to crisis point
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By Lee Kyung-min
By Lee Kyung-min
Russia's invasion of Ukraine is showing signs of developing into a global food crisis, as indicated by key staple food prices registering a record-high increase in February, United Nations data showed Sunday.
Disruptions will be most pronounced in the global grain and edible vegetable oil supply, since the two countries account for a combined 29 percent of global grain exports and 80 percent of sunflower oil exports, respectively.
The military conflict will come at the expense of low-income groups in countries which almost exclusively rely on imported cheap agricultural produce for survival, a risk compounded further by soaring living expenses brought on by inflation amid the COVID-19 pandemic.
Record-high figures
According to the Ministry of Agriculture, Food and Rural Affairs, the United Nations Food and Agriculture Organization (FAO) said on March 4 (local time) that the FAO Food Price Index (FFPI) rose to 140.7 last month, the highest since the international organization began compiling related data in 1996.
The increase was 3.9 percent, month-on-month. But on a year-on-year basis, it had spiked 24.1 percent.
The index measures current food prices relative to 100, the average of corresponding item prices between 2002 and 2004.
February's index was 3.1 points higher than that of February 2011, when global food prices significantly increased in the midst of the Arab Spring, a series of anti-government movements in the Arab world.
All items rose except for sugar. Dairy products and fats and oils reported the steepest increases.
The grain price index climbed 3 percent from a month earlier, driven by uncertainties in the exports of wheat produced in Russia and Ukraine, as well as corn produced in Ukraine. The increase was 14.8 percent, year-on-year.
The vegetable oil and dairy price indexes surged 8.5 percent and 6.4 percent, month-on-month, respectively. These increases amounted to 36.7 percent 24.8 percent, year-on-year, respectively.
March will be grimmer since last month's figures were compiled before the full-fledged war between the two countries, Seoul National University economics professor Lee In-ho said.
“The war-triggered price increases of cheap agricultural produce will put a greater burden on low-income groups all around the world, adding to the financial strain from the years of the pandemic that shows no immediate signs of dying down,” he said.
The ministry has raised the ceiling for the duty-free import of covered barley to 100,000 tons from 40,000 tons, as part of emergency relief measures for farming industries.
It has also lowered the borrowing rates for agriculture businesses on loans sought for the purchase of raw materials to between 2 percent and 2.5 percent, down 0.5 percentage points from between 2.5 percent and 3 percent.