‘Day to day’: Trade bans and inflation drive up food prices
Soki Wu’s food stall, tucked away in a food court in a mall in Singapore, is a crowd favorite for its fresh and juicy ‘chicken rice’, a national dish. But customers have recently started complaining that his chicken doesn’t taste as good as it used to.
Wu was forced to switch to frozen chicken after Malaysia last month banned exports of live broilers which are more affordable and taste better in a bid to offset rising local prices. For Singapore, which sources a third of its poultry from Malaysia, the impact was immediate.
» It’s inevitable. Using frozen chicken affected the taste of the dish, but we have no choice,” Wu said.
As inflation rises around the world, politicians scramble to find ways to keep food affordable as people increasingly protest the soaring cost of living. A knee-jerk response has been food export bans aimed at protecting domestic prices and supplies as a growing number of governments in developing countries try to show nervous public that their needs will be met.
For business owners, the rising cost of cooking ingredients – from oil to chicken – prompted them to raise prices, with people paying 10-20% more at Wu’s food stall. , this means paying more for the same or lower quality food or cutting out certain habits altogether.
In Lebanon, where rampant corruption and political gridlock have crippled the economy, the United Nations World Food Program is increasingly providing people with cash assistance to buy food, especially after a devastating port explosion in 2020 which destroyed huge grain silos. Constant power cuts and high fuel prices for generators limit what people can buy because they cannot rely on freezers and refrigerators to store perishables.
Tracy Saliba, a single mother of two and business owner in Beirut, says she used to spend about a quarter of her income on food. These days, half of his income goes to feed his family as the currency loses its strength in the face of soaring prices.
« I don’t buy (groceries) like before, » Saliba said. « I just get the necessary items and food, like day after day. »
Food prices have risen nearly 14% this year in emerging markets and more than 7% in advanced economies, according to Capital Economics. In countries where people spend at least a third or more of their income on food, any sharp rise in prices can lead to a crisis.
Capital Economics predicts that households in developed markets will spend an additional $7 billion a month on food and beverages this year and much of next year due to inflation.
The pain is felt unevenly, with 2.3 billion people suffering from severe or moderate hunger last year, according to a global report by the World Food Program and four other United Nations agencies.
Food prices accounted for about 60% of last year’s inflation increase in the Middle East and North Africa, excluding the oil-producing Gulf countries. The situation is particularly dire for Sudan, where inflation is expected to hit 245% this year, and Iran, where prices soared as much as 300% for chicken, eggs and milk in May, sparking panic and scattered demonstrations.
In Somalia, where 2.7 million people cannot meet their daily food needs and children are dying of malnutrition, sugar is a source of energy. In May, a kilogram (2.2 pounds) of sugar cost around the equivalent of 72 cents in Mogadishu, the capital. A month later, it had climbed to $1.28 per kilogram.
« At home, I serve tea (with sugar) three times a day, but from now on I have to reduce it drastically to only do it when guests arrive, » said Asli Abdulkadir, a woman Somali housewife and mother of four.
People there are bracing for even higher costs after India announced it would cap sugar exports this year. While this does not reduce India’s sugar exports from previous years, news of the restriction was enough to spark speculation among traders like Ahmed Farah in Mogadishu.
« The cost of sugar is expected to rise as Somalia relies heavily on exported white sugar from India and some brown sugar from Brazil, » he said.
Food export restrictions aimed at protecting domestic supplies and limiting inflation are one of the reasons for the rising cost of food.
Food prices have been steadily rising around the world due to drought, supply chain issues and high energy and fertilizer costs. The Food and Agriculture Organization of the United Nations says food prices rose 23% last year.
Russia’s war in Ukraine has further driven up the price of wheat and cooking oils, fueling a global food crisis. There was a breakthrough this week to create safe corridors for Black Sea shipments, but Ukrainian ports have been blocked from exporting these key goods for months and it will take time to get them back to vulnerable countries of the whole world.
There are fears that the impact of all these factors could lead to more countries resorting to food export bans, which are felt globally. When Indonesia blocked the export of palm oil for a month in April, palm oil prices soared by at least 200%.
Analysts say food export bans are short-sighted as they have the domino effect of driving up prices.
“I would say about 80% of the bans we see are ill-advised — sort of a knee-jerk reaction by some politicians,” said David Laborde, who is credited with creating a food trade policy tracker. at the International Food Policy Research Institute.
« In the world where you’ll be the only one doing it, it can make sense, » he said. « But in a world where other countries can do it too, that’s far from a good idea. »
Laborde said the bans are « a very selfish policy…because you’re trying to make yourself better by making it worse for other people. »
The list of food export restrictions that Laborde has been following since the COVID-19 pandemic is long and constantly changing. Examples of their impact include Kazakhstan’s grain and oil price restrictions in Uzbekistan, Tajikistan, Turkmenistan and Afghanistan; restriction of rice exports from Cameroon to Chad; and Tunisia’s restrictions on fruits and vegetables in Libya.
In Singapore, 29-year-old Wu hopes to keep the family business running as the Singaporean government approves Indonesia as a new chicken supplier.
« Things will get better, » he said. « (It) will only make us more resilient. »
Batrawy reported from Dubai, United Arab Emirates; Ng from Kuala Lumpur, Malaysia; Chehayeb of Beirut; and Faruk from Mogadishu, Somalia.
Aya Batrawy, Eileen Ng, Omar Faruk and Kareem Chehayeb, The Associated Press