Food inflation

Last updated
Food inflation across the world in 2022 Inflation In Food Consumer Prices (2022 Average).svg
Food inflation across the world in 2022

Food inflation is a type of inflation, that effects food items. It often the most noticeable form of inflation, and tends to impact lower income individuals the hardest. Common causes include poor harvest, war, increasing energy prices, and food being unharvested. Food inflation almost always leads to currency inflation, as food is a requirement for survival. [1] [2] [3]

Contents

The most common policy to counter-measure to food inflation is price controls. During times of crisis, such as war or famine governments often implement a system of food rationing. Food stamps, or a food aid to lower income individuals. Maintaining a varied agricultural industry can help midigate the effects of food inflation on a single crop. In the case of artificial food inflation laws or litigation can be used against corporations that practice predatory pricing, monopoly pricing or price gouging. Lower income individuals have lower savings and tend to spend more of their income on basic necessities, resulting in food inflation disproportionally effecting those who are lower income. [4] [5] [6]

Overview

World inflation rate April 2024.png
Inflation across IMF countries in 2023
World Inflation Rate 2019.png
Inflation across the world in 2019 by the World Economic Outlook in 2024

Food inflation encompasses, and expands beyond into agricultural inflation, and usually effects specific food more so then others. Particular foods that are hit by food inflation are luxury foods such as truffles. [7] [8] Plants or animals that are scarce or require extensive effort to procure are usually highly susceptible to minor changes such as climate change. Such foods are also usually unable to be harvested in times of instability, and demand for such products tend to decrease. Seasonal foods are particularly affected by food inflation, as the supply of the food is limited. [9]

Although luxury or niche foods are the most susceptible to food inflation, they tend to have minor effects on the population. Food inflation on staple foods, such as wheat, rice or corn are rarer, but its effects tend to be devastating. Generally most countries try to avoid food inflation on staple foods at all cost, such as by subsiding bread. Areas that have high food inflation on stable foods tend to be in periods of high instability, or have an incredibly poor harvest. [10]

Food inflation on stable foods can occur from disease, especially when the biodiversity of the crop is low. As with low genetic diversity, one disease can wipe out entire fields. Generally stable foods are plants, as meats usually are fed using edible plants, and are typically more expensive. Exceptions including herding in regions where the plants are inedible to humans, such as in Mongolia (sheep), the Sioux (bison), and the Sami people, (reindeer). In developed nations, meat may also be a staple food owing to greater wealth. [11] [12] [2]

Causes

Gros Michel banana the previous standard variety of banana was devastated by Panama disease due to monocultural practices, leading to the Cavendish becoming standard Banana wilt (1919) (20166670479).jpg
Gros Michel banana the previous standard variety of banana was devastated by Panama disease due to monocultural practices, leading to the Cavendish becoming standard

Causes include climate change, instability, poor harvest, and high energy cost. It can be induced by crop disease such as the great Irish famine which was caused by a monoculture of planting a single species of potato, the Irish Lumper. When Phytophthora infestans (potato blight) spread to Ireland, the low genetic diversity of the crop resulted in the majority of the crop dying, resulting in exponentially high food inflation, the subsequent inaction and exploitation by British officials caused a famine. [13] [14] Other times food inflation can be caused by intentional price gouging in which usually large corporations control an artificially high price for the cost of food, often this is done first through predatory pricing in which the cost of food items are set below market value at which point competition is driven out and artificially high prices become standard. [15] [16]

Food inflation is also often caused by war in which trade slows and food often becomes scarce. During times or war or instability, rationing systems are often used to avoid food inflation, speculation or food hoarding which is usually overseen by the military. Food inflation caused by military endeavors can often lead to famine, such the Bengal famine in which massive amounts of rice and grain was taken away from the population of Bengal to feed British civilians and soldiers, as such the Bengal famine is often classified as a man made famine.

One of the main determining factor of the price of food is energy cost, harvesting machines (such as combine harvesters) require large amounts of energy to maintain high crop yields. As well as this crop tending requires high amounts of energy, such as watering, fertilizing, and weeding, thereby increases to the cost of energy directly affects food prices. [7] The 1970s energy crisis saw a major spike in food inflation as food production became more expensive. Another cause is perpetual monoculture practices, which can degrade soil leading to lower yields and thereby requiring exponentially higher levels of fertilizer, particularly nitrogen.

Effects

Those most affected by food inflation tend to be lower income individuals, who spend more money on basic necessities. As food prices increase, most purchases by the lower class stop to maintain basic needs, which in turn leads to economic slowdown. Generally high income individuals are not as affected by food inflation, as these individuals tend to have large savings, can afford basic foods, and spend less of their income on food. Food affordability is associated with increased stress, and impacting a person's quality of life. [17]

Prevention and counter measures

World War I poster of the United States Food Administration on price controls "Prices charged in this store will not exceed those indicated in the most recent list of Fair Prices applicable to this - NARA - 512556.jpg
World War I poster of the United States Food Administration on price controls

The main way to prevent food inflation is by maintaining a healthy agricultural sector, and maintaining trade. Price controls are often used to maintain affordable prices, although this can backfire if the price of harvesting the food begins to outweigh the price of the food. Food banks are usually used to stockpile large amounts of usually non-perishable food which can then be distributed to those in need. Maintaining sustainable agricultural practices that do not overrely on monoculture or a single genetic variant of a crop can protect against food inflation. In the case of price gouging, consumer protections can be enforced to counteract inflation by litigation for unfair practices, or by banning predatory pricing. Parts of Europe such as Germany have banned predatory pricing. [18]

Food is considered by almost all countries on earth to be a human right, and giving food aid, or subsidized food lower income individuals helps mitigate one of the main groups affected by food inflation. During times of international crisis, food inflation can result in famine, under these circumstance many poor countries rely on humanitarian aid.

History

Food inflation has been documented for nearly all of human agricultural history. Early attempts to curb Ancient inflation included the Edict on Maximum Prices by Diocletian which attempted to maintain a price control for food, which had risen dramatically during the crisis of the third century.

One of the main instigators of the French Revolution was high food inflation with a poor harvest the year prior, the women's march on Versailles was caused by the increasing price of bread, and is often seen as one of the major moments in the French Revolution. The Russian Revolution, and Syrian civil war were both predated by high food inflation.

As wars progress, food scarcity generally increases, and if a population is not fed it can result in political unrest. This occurred with the Russian revolution and the southern bread riots where a lack proper food distribution resulted in an uprising.

During the COVID-19 pandemic food prices rose dramatically. In the United States average food prices rose 25% from 2019 to 2023. [19] Food demand also rose dramatically, across the world over the same period. [20]

See also

Related Research Articles

<span class="mw-page-title-main">Cereal</span> Grass that has edible grain

A cereal is a grass cultivated for its edible grain. Cereals are the world's largest crops, and are therefore staple foods. They include rice, wheat, rye, oats, barley, millet, and maize. Edible grains from other plant families, such as buckwheat and quinoa, are pseudocereals. Most cereals are annuals, producing one crop from each planting, though rice is sometimes grown as a perennial. Winter varieties are hardy enough to be planted in the autumn, becoming dormant in the winter, and harvested in spring or early summer; spring varieties are planted in spring and harvested in late summer. The term cereal is derived from the name of the Roman goddess of grain crops and fertility, Ceres.

<span class="mw-page-title-main">Inflation</span> Devaluation of currency over a period of time

In economics, inflation is a general increase in the prices of goods and services in an economy. This is usually measured using a consumer price index (CPI). When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of CPI inflation is deflation, a decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. As prices faced by households do not all increase at the same rate, the consumer price index (CPI) is often used for this purpose.

<span class="mw-page-title-main">Monoculture</span> Farms producing only one crop at a time

In agriculture, monoculture is the practice of growing one crop species in a field at a time. Monoculture is widely used in intensive farming and in organic farming: both a 1,000-hectare cornfield and a 10-ha field of organic kale are monocultures. Monoculture of crops has allowed farmers to increase efficiency in planting, managing, and harvesting, mainly by facilitating the use of machinery in these operations, but monocultures can also increase the risk of diseases or pest outbreaks. This practice is particularly common in industrialized nations worldwide. Diversity can be added both in time, as with a crop rotation or sequence, or in space, with a polyculture or intercropping.

Organic farming, also known as organic agriculture or ecological farming or biological farming, is an agricultural system that uses fertilizers of organic origin such as compost manure, green manure, and bone meal and places emphasis on techniques such as crop rotation and companion planting. It originated early in the 20th century in reaction to rapidly changing farming practices. Indeed, so-called "organic pioneers" wanted to keep farming with nature, without being dependent on external inputs. Certified organic agriculture accounts for 70 million hectares globally, with over half of that total in Australia. Biological pest control, mixed cropping, and the fostering of insect predators are encouraged. Organic standards are designed to allow the use of naturally-occurring substances while prohibiting or severely limiting synthetic substances. For instance, naturally-occurring pesticides such as garlic extract, bicarbonate of soda, or pyrethrin which is found naturally in the Chrysanthemum flower are permitted, while synthetic fertilizers and pesticides such as glyphosate are prohibited. Synthetic substances that are allowed, only in exceptional circumstances, include, for example, copper sulfate, elemental sulfur, and veterinary drugs. Genetically modified organisms, nanomaterials, human sewage sludge, plant growth regulators, hormones, and antibiotic use in livestock husbandry are prohibited. Organic farming positively impacts sustainability, self-sufficiency, autonomy and independence, health, animal welfare, food security, and food safety. Organic farming can therefore be seen as part of the solution to the impacts of climate change, as also established by the Food and Agriculture Organisation (FAO).

<span class="mw-page-title-main">Intensive farming</span> Branch of agriculture

Intensive agriculture, also known as intensive farming, conventional, or industrial agriculture, is a type of agriculture, both of crop plants and of animals, with higher levels of input and output per unit of agricultural land area. It is characterized by a low fallow ratio, higher use of inputs such as capital, labour, agrochemicals and water, and higher crop yields per unit land area.

<span class="mw-page-title-main">Agricultural subsidy</span> Governmental subsidy paid to farmers and agribusinesses

An agricultural subsidy is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.

<span class="mw-page-title-main">Agricultural productivity</span> Quotient between production and productive factors

Agricultural productivity is measured as the ratio of agricultural outputs to inputs. While individual products are usually measured by weight, which is known as crop yield, varying products make measuring overall agricultural output difficult. Therefore, agricultural productivity is usually measured as the market value of the final output. This productivity can be compared to many different types of inputs such as labour or land. Such comparisons are called partial measures of productivity.

<span class="mw-page-title-main">Food security</span> Measure of the availability and accessibility of food

Food security is the state of having reliable access to a sufficient quantity of affordable, nutritious food. The availability of food for people of any class and state, gender or religion is another element of food security. Similarly, household food security is considered to exist when all the members of a family, at all times, have access to enough food for an active, healthy life. Individuals who are food-secure do not live in hunger or fear of starvation. Food security includes resilience to future disruptions of food supply. Such a disruption could occur due to various risk factors such as droughts and floods, shipping disruptions, fuel shortages, economic instability, and wars. Food insecurity is the opposite of food security: a state where there is only limited or uncertain availability of suitable food.

<span class="mw-page-title-main">Cash crop</span> Agricultural crop grown to sell for profit

A cash crop, also called profit crop, is an agricultural crop which is grown to sell for profit. It is typically purchased by parties separate from a farm. The term is used to differentiate marketed crops from staple crop in subsistence agriculture, which are those fed to the producer's own livestock or grown as food for the producer's family.

<span class="mw-page-title-main">Harvest</span> Process of gathering mature crops from fields

Harvesting is the process of collecting plants, animals, or fish as food, especially the process of gathering mature crops, and "the harvest" also refers to the collected crops. Reaping is the cutting of grain or pulses for harvest, typically using a scythe, sickle, or reaper. On smaller farms with minimal mechanization, harvesting is the most labor-intensive activity of the growing season. On large mechanized farms, harvesting uses farm machinery, such as the combine harvester. Automation has increased the efficiency of both the seeding and harvesting processes. Specialized harvesting equipment, using conveyor belts for gentle gripping and mass transport, replaces the manual task of removing each seedling by hand. The term "harvesting" in general usage may include immediate postharvest handling, including cleaning, sorting, packing, and cooling.

<span class="mw-page-title-main">Mechanised agriculture</span> Agriculture using powered machinery

Mechanised agriculture or agricultural mechanization is the use of machinery and equipment, ranging from simple and basic hand tools to more sophisticated, motorized equipment and machinery, to perform agricultural operations. In modern times, powered machinery has replaced many farm task formerly carried out by manual labour or by working animals such as oxen, horses and mules.

<span class="mw-page-title-main">Food security in Malawi</span>

Malawi is one of the world's undeveloped countries and is ranked 170 out of 187 countries according to the 2010 Human Development Index. It has about 16 million people, 53% of whom live under the national poverty line and 90% of whom live on less than $2 per day.

<span class="mw-page-title-main">United States farm bill</span> Primary agricultural and food policy instrument of the federal government

In the United States, the farm bill is comprehensive omnibus bill that is the primary agricultural and food policy instrument of the federal government. Congress typically passes a new farm bill every five to six years.

The agricultural policy of the United States is composed primarily of the periodically renewed federal U.S. farm bills. The Farm Bills have a rich history which initially sought to provide income and price support to US farmers and prevent them from adverse global as well as local supply and demand shocks. This implied an elaborate subsidy program which supports domestic production by either direct payments or through price support measures. The former incentivizes farmers to grow certain crops which are eligible for such payments through environmentally conscientious practices of farming. The latter protects farmers from vagaries of price fluctuations by ensuring a minimum price and fulfilling their shortfalls in revenue upon a fall in price. Lately, there are other measures through which the government encourages crop insurance and pays part of the premium for such insurance against various unanticipated outcomes in agriculture.

<span class="mw-page-title-main">2007–2008 world food price crisis</span> World food prices increased dramatically in 2007 and the 1st and 2nd quarter of 2008

World food prices increased dramatically in 2007 and the first and second quarter of 2008, creating a global crisis and causing political and economic instability and social unrest in both poor and developed nations. Although the media spotlight focused on the riots that ensued in the face of high prices, the ongoing crisis of food insecurity had been years in the making. Systemic causes for the worldwide increases in food prices continue to be the subject of debate. After peaking in the second quarter of 2008, prices fell dramatically during the late-2000s recession but increased during late 2009 and 2010, reaching new heights in 2011 and 2012 at a level slightly higher than the level reached in 2008. Over the next years, prices fell, reaching a low in March 2016 with the deflated Food and Agriculture Organization (FAO) food price index close to pre-crisis level of 2006.

<span class="mw-page-title-main">Grain</span> Edible dry seed

A grain is a small, hard, dry fruit (caryopsis) – with or without an attached hull layer – harvested for human or animal consumption. A grain crop is a grain-producing plant. The two main types of commercial grain crops are cereals and legumes.

Costa Rican agriculture plays a profound part in the country's gross domestic product (GDP). It makes up about 6.5% of Costa Rica's GDP, and 14% of the labor force. Depending upon location and altitude, many regions differ in agricultural crops and techniques. The main exports include: bananas, pineapples, coffee, sugar, rice, vegetables, tropical fruits, ornamental plants, corn, potatoes and palm oil.

Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices affect producers and consumers of food. Price levels depend on the food production process, including food marketing and food distribution. Fluctuation in food prices is determined by a number of compounding factors. Geopolitical events, global demand, exchange rates, government policy, diseases and crop yield, energy costs, availability of natural resources for agriculture, food speculation, changes in the use of soil and weather events directly affect food prices. To a certain extent, adverse price trends can be counteracted by food politics.

<span class="mw-page-title-main">Food security in Chad</span>

Chad currently suffers from widespread food insecurity. A majority of the population of Chad now suffers some form of malnutrition. 87% of its population lives below the poverty line. Because the country is arid, landlocked, and prone to droughts, many Chadians struggle to meet their daily nutritional needs. While international aid into the country has brought some relief, the situation in Chad remains severe due to broader famine in the Sahel region. The World Food Programme has declared a state of emergency in the region since early 2018, stating that, “...adding to the poverty, food insecurity and malnutrition which already affects [the nations of the Sahel] to varying degrees, drought, failed harvests and the high prices of staple foods have hastened the arrival of this year’s ‘lean season’ – the worst since 2014.” Malnutrition is high, especially among women and children, with a significant majority of all children in Chad suffering from some form of stunted growth or adverse health effects as a result. As such, health in Chad is greatly affected by lack of food. Food insecurity is a symptom of broader instability in Chad, which suffers from political, ethnic, and religious instability. These issues have contributed to long-term food insecurity in Chad.

During 2022 and 2023 there were food crises in several regions as indicated by rising food prices. In 2022, the world experienced significant food price inflation along with major food shortages in several regions. Sub-Saharan Africa, Iran, Sri Lanka, Sudan and Iraq were most affected. Prices of wheat, maize, oil seeds, bread, pasta, flour, cooking oil, sugar, egg, chickpea and meat increased. Many factors have contributed to the ongoing world food crisis. These include supply chain disruptions due to the COVID-19 pandemic, the 2021–2023 global energy crisis, the Russian invasion of Ukraine, and floods and heatwaves during 2021. Droughts were also a factor; in early 2022, some areas of Spain and Portugal lost 60–80% of their crops due to widespread drought.

References

  1. ↑ "A Double Burden: The effects of food price increases and currency depreciations on food import bills". UN Trade and Development. 2022.
  2. 1 2 CHAND, RAMESH (2010). "Understanding the Nature and Causes of Food Inflation". Economic and Political Weekly. 45 (9): 10–13. JSTOR   25664159 – via JSTOR.
  3. ↑ "How Food and Energy are Driving the Global Inflation Surge". IMF. September 12, 2022.
  4. ↑ Davidson, Paul. "Inflation is battering lower-income households most as food, housing costs soar, Fed study says". USA TODAY.
  5. ↑ "High inflation disproportionately hurts low-income households". www.dallasfed.org.
  6. ↑ "Consumers continue to lower food inflation expectations and estimates". Purdue University - College of Agriculture.
  7. 1 2 Ismaya, Bambang Indra; Anugrah, Donni Fajar (July 31, 2018). "Determinant of Food Inflation". Bulletin of Monetary Economics and Banking. 21 (1): 81–94. doi: 10.21098/bemp.v21i1.926 .
  8. ↑ "Truffle Prices 2024 and Complete Truffle Guide". hospitalityinsights.ehl.edu.
  9. ↑ "Eggs, fruit, and vegetables have the most volatile prices". www.ers.usda.gov.
  10. ↑ "The Changing Drivers of Food Inflation – Macroeconomics, Inflation, and War by Bernardina Algieri, Lukas Kornher, Joachim von Braun :: SSRN". SSRN   4748639.
  11. ↑ "SNAP Staple Foods | Food and Nutrition Service". www.fns.usda.gov.
  12. ↑ Lulka, David (2006). "Bison and the Food Distribution Program on Indian Reservations". Great Plains Research. 16 (1): 73–84. JSTOR   23779727 – via JSTOR.
  13. ↑ "What Caused the Irish Potato Famine? | Mises Institute". mises.org. March 17, 2017.
  14. ↑ "Who's Responsible? - The Pernicious Characteristics Of Monocultures | Hackers | FRONTLINE | PBS". www.pbs.org.
  15. ↑ "THE MORE ECONOMIC APPROACH TO PREDATORY PRICING | Journal of Competition Law & Economics | Oxford Academic".
  16. ↑ Baumol, William J. (1979). "Quasi-Permanence of Price Reductions: A Policy for Prevention of Predatory Pricing" (PDF). The Yale Law Journal. 89 (1): 1–26. doi:10.2307/795909. JSTOR   795909.
  17. ↑ Mitra, Sophie; Shen, Chan; Pinnamraju, Jahnavi; Wiener, R. Constance; Wang, Hao; Pathak, Mona; Findley, Patricia A.; Sambamoorthi, Usha (January 30, 2024). "Stress Due to Inflation: Changes over Time, Correlates, and Coping Strategies among Working-Age Adults in the United States". International Journal of Environmental Research and Public Health. 21 (2): 157. doi: 10.3390/ijerph21020157 . PMC   10887512 . PMID   38397647.
  18. ↑ "Act Against Unfair Competition (as amended up to Law of February 17, 2016), Germany, WIPO Lex". www.wipo.int.
  19. ↑ "USDA ERS - Food Prices and Spending". www.ers.usda.gov.
  20. ↑ Vos, Rob; Glauber, Joseph; Hernandez, Manuel; Debucquet, David. "COVID-19 and food inflation scares: Two years later, eds. John McDermott and Johan Swinnen. Part Two: Agricultural Production and Value Chains, Chapter 10, Pp. 64-72".
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.