Russia-Ukraine War Impact: High Price Of Food Products All-over The World

India’s comfortable public rice and wheat stocks provides some cushion against international price surge. But the cost of farm inputs (diesel, fertilisers and pesticides) presents equal challenges, with frequent rise. 

The UN Food and Agriculture Organization’s (FAO) food price index averaged 159.3 points in March, up from the previous month’s 141.4 points, which had itself broken an earlier record of 137.6 points scaled 11 years ago in February 2011.

The cereal and vegetable oil price of the FAO (The Food and Agriculture Organization of the United Nations) indices hit record highs of 170.1 points and 248.6 points, respectively, in March, given Russia and Ukraine’s combined share of 28.3%, 19.5%, 30.8% and 78.3% in global exports of wheat, corn (maize), barley and sunflower oil, respectively. All these were projections for 2021-22 made by the US Department of Agriculture in early-February, before the Russian invasion happened.

The closures of port in the Black Sea and Azov Sea, plus Russian banks being cut off from the international payments system, have resulted in massive shipping disruptions from this key agri-commodities supply region. The supply shortages have worsened with the Black Sea region tensions, leading to the index moving up almost 24 points or 17.5% between January and March (see chart).

While the FAO index, which is a weighted average of world prices of a basket of food commodities over a base period value (in this case, taken at 100 for 2014-16), has exhibited huge volatility in the last two years through the Covid-19 pandemic and now due to the Russia-Ukraine war.

A lot of people in India, are now cutting down on fried food and even vegetables as the Ukraine war inflates the prices of items from edible oils to fuel, threatening a sputtering recovery in the consumption-based economy after two years of battling COVID-19.

Consumers in Asia’s third-largest economy are going through a tough phase as companies pass on higher costs since the invasion, battling the first hikes in five months this week in the prices of diesel and petrol, as well as more expensive vegetable oils.

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