Maximo Torrero, the chief economist at the United Nations Food and Agriculture Organization (FAO), has expressed concern over a potential new wave of food price hikes globally. The warning comes amid complex geopolitical and climatic challenges that are creating conditions for high production costs. Although food prices have remained relatively stable in the year of the report's publication, trends indicate a shift in the coming period.
The war in Ukraine and conflicts in Iran, combined with the El Niño weather phenomenon, are significantly contributing to market instability. These factors are not only disrupting production but also drastically increasing energy and logistics costs. Higher oil prices, coupled with diesel shortages in certain parts of the world and a lack of fertiliser supplies from the region around the Persian Gulf, are directly increasing the cost of agricultural production. Extreme weather conditions are further straining this supply chain.
Although high energy costs in some parts of the world have temporarily slowed the rise in consumer prices, economists predict that increased production costs will ultimately be passed on to consumers. The pass-through of costs from basic agricultural products to the final food product typically takes between three and six months. Prices for basic commodities have already begun to rise more sharply, and food prices are expected to continue rising through the end of the year.
Over the past months, a rise in prices for key grains such as wheat, corn, and rice has been recorded. Experts note that this increase partially reflects the relatively good harvest, but trends indicate that prices will rise even more strongly next year. It is recalled that food prices were the main driver of the wave of inflation globally in 2022, highlighting the sensitivity of the global market.
The Strait of Hormuz, which affects all incoming elements required for food production, presents a particular challenge. This strategic point is becoming increasingly critical for supply. Given the accumulated pressures, the FAO warns that it is preparing for a period in which consumers will feel a significant increase in the prices of food products on the shelves.
