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Global Food Prices Set to Surge if West Asia Conflict Extends Beyond 40 Days

World food commodity prices increased for the second consecutive month in March, largely driven by higher energy prices linked to the West Asia conflict. FAO Chief Economist Maximo Torero warns that if the crisis extends beyond 40 days, farmers may reduce inputs or plant less, severely impacting future yields and prices. While cereal prices rose, particularly for wheat, the rice price index declined due to harvest timing and weaker demand. The overall outlook suggests continued pressure on food supplies and costs for the remainder of this year and into the next.

Key Points: FAO Warns of Rising Food Prices from Prolonged West Asia Crisis

  • March food prices rose 2.4%
  • Higher energy prices drive increases
  • Future yields at risk from high input costs
  • Global wheat harvest forecast to drop 1.7%
3 min read

Food prices to rise further globally if West Asia crisis stretches beyond 40 days: FAO

FAO reports global food prices rose in March. Chief Economist warns of severe future price hikes if conflict continues, impacting yields and supply.

"If the conflict stretches beyond 40 days... Those choices will hit future yields and shape our food supply and commodity prices. - Maximo Torero"

New Delhi, April 3

World food commodity prices rose in March for the second month in a row, largely due to higher energy prices linked to the conflict escalation in West Asia, the Food and Agriculture Organization of the United Nations said on Friday.

The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally-traded food commodities, averaged 128.5 points in March, up 2.4 percent from February and 1.0 percent above its level a year ago.

"Price rises since the conflict began have been modest, driven mainly by higher oil prices and cushioned by ample global cereal supplies," said FAO Chief Economist Maximo Torero.

"But if the conflict stretches beyond 40 days with high input costs with current low margins, farmers will have to choose: farm the same with fewer inputs, plant less, or switch to less intensive fertiliser crops. Those choices will hit future yields and shape our food supply and commodity prices for the rest of this year and all of the next," Torero added.

The FAO Cereal Price Index increased by 1.5 per cent from the previous month, driven primarily by higher world wheat prices, which rose 4.3 per cent due to drought-related deterioration of crop prospects in the United States of America and expectations of reduced plantings in Australia due to higher fertiliser costs.

Global maize quotations edged up slightly, as ample global availability offset concerns over fertilizer affordability and indirect support from greater ethanol demand prospects linked to the rising energy prices.

The FAO All-Rice Price Index declined by 3.0 per cent in March, driven by harvest timing, weaker import demand, and currency depreciations against the United States dollar.

The FAO Vegetable Oil Price Index increased by 5.1 per cent from February to stand 13.2 per cent higher than its year-earlier level. International quotations for palm, soy, sunflower and rapeseed oil all rose, reflecting spillover effects from the sharp increases in crude oil prices, which catalysed expectations of stronger demand for biofuels.

The FAO Meat Price Index increased by 1.0 per cent from the previous month, driven by a surge in pig meat prices in the European Union ahead of strengthening seasonal demand, along with higher world bovine meat prices, particularly in Brazil, where exportable supplies were curtailed by tightening cattle availability.

Ovine and poultry meat prices declined, partly due to logistical constraints limiting access to markets in the Near East.

The FAO Dairy Price Index increased by 1.2 per cent, and Sugar Price Index increased by 7.2 per cent in March.

Rising expectations that Brazil, the main sugar exporter, would use more sugarcane to produce ethanol to counter higher international crude oil prices overweighed a generally favourable global supply outlook for the current season, supported by good harvest progress in India and Thailand.

With most of the world's wheat crop already planted, FAO forecasts worldwide harvests of 820 million tonnes, a 1.7 per cent drop from the previous year.

- IANS

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Reader Comments

S
Sarah B
The 40-day warning is stark. It shows how interconnected everything is - a conflict far away can hit our kitchen budgets. At least rice prices are down for now, which is a relief for Indian households. Hope our farmers get the right support to navigate these input costs.
P
Priya S
My father is a farmer in Punjab. He's already talking about cutting back on fertiliser for the next wheat season because the costs are just too much. The article is right, this will directly hit yields. Governments need to subsidise inputs, not just promise MSPs. 🙏
A
Arjun K
Good to see India and Thailand mentioned for good sugar harvests. We need to focus on self-reliance in food. But the vegetable oil price jump is a problem - we import so much palm oil. Time to push for more domestic oilseed production under mission schemes.
M
Michael C
While the analysis is sound, I respectfully think it underplays the role of biofuels. Diverting food crops (sugarcane, palm oil) to fuel when people are struggling to eat is a policy choice we should question, not just accept as an inevitable market reaction.
N
Nisha Z
Every time there's tension in West Asia, our petrol and food prices shoot up. It's a cycle now. The middle class is getting squeezed from all sides. Hope the authorities are planning ahead with price control measures for essential items.

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