Agricultural Economics Department
Date of this Version
5-8-2022
Citation
Cornhusker Economics June 8, 2022
Abstract
Inflation driven by rising prices for food, energy, and other consumer goods has become a major concern in the United States and other high-income countries. A far more serious issue is the effect of rising food prices on low-income households in many developing countries in Africa, Asia, and Latin America. Global food prices had been rising in 2020 and 2021 as a result of supply shortages caused by adverse weather conditions exacerbated by climate change, war and civil strife in various countries, and economic shocks in the aftermath of the Covid-19 pandemic and the consequent disruption of global supply chains (Food Security Information Network 2022). In 2022, these trends were amplified by Russia’s invasion of Ukraine and the blocking of significant agricultural exports from the Black Sea region (World Food Program 2022). Global food prices are likely to continue rising threatening millions of people around the world with serious food insecurity and malnutrition. The United Nations Food and Agriculture Organization (FAO) publishes a world food price index based on prices for meat, dairy, cereal grains, oilseeds, and sugar. Both real (inflationadjusted) and nominal price indexes are shown in Figure 1. Real food prices increased rapidly in the early 1970s as a result of supply shortages and rising oil prices brought about by the actions of the Organization of Petroleum Exporting Countries (OPEC). Real food and other commodity prices fell during the 1980s and remained
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