Europe

Already surging, food prices in Europe at risk of further increase due to climate

Extreme drought could push food prices to new highs in Europe as record inflation imperils poor, low-income people

Gokhan Kurtaran  | 07.09.2022 - Update : 08.09.2022
Already surging, food prices in Europe at risk of further increase due to climate FILE PHOTO

LONDON

Food prices that have already reached alarming levels in a year due to the boom in demand after the coronavirus pandemic, growing supply chains issues, the Russia-Ukraine war, and surging energy and logistics costs are expected to rise further in the coming period due to the climate crisis.

Euro-area annual consumer inflation jumped to a new record of 9.1% in August, mainly led by energy, which was up 38.3%, and food, alcohol, and tobacco that rose 10.6%.

Despite the UN Food and Agriculture Organization Food Price Index showing global food prices going down for the fifth month in a row after a 1.9% month-on-month decline in August, European consumers are expected to face increased food prices during the coming winter season.

According to experts, harsh climatic conditions and extreme heat are expected to significantly reduce total crop yields in agricultural areas, which will lead to a further jump in the food prices, putting more pressure on poor and low-income people.

In the August 2022 report Drought in Europe, the European Commission's Joint Research Centre forecast that grain maize yields in the EU would drop by 16%, as would soybeans by 15%, and sunflowers by 12%, compared to the five-year average.

The decline in agricultural production is expected to spread to other food products with a domino effect and increase inflationary pressures on food prices.

The food commodity prices indicator chart of the EU's 27 members also showed that annual price increases in some basic food products was considerably higher than global price increase in July.

For example, the price of durum wheat soared by 31.5% globally on an annual basis but by an average of 87.7% in the bloc.

The price of corn, on the other hand, increased worldwide by 9.8% annually as of July, while in the EU, it rose by 24.6%.

In July, beef prices climbed by just 4.6% yearly on a global scale, while increasing by 27.8% in the EU.

UK food prices post sharpest rise since financial crisis

In the UK, a growing labor force gap was another fundamental factor boosting food prices.

Moreover, the skilled labor shortage -- around 1.3 million -- particularly in the agriculture and livestock sectors is expected to have a serious impact on production and prices.

Since the last quarter of 2021, the shortage in drivers of heavy-duty transport vehicles created a domino effect in almost every sector and turned into a serious supply crisis.

A similar situation emerged due to the insufficient number of slaughterhouse staff in the UK during Christmas last year and the severe labor shortage at airports this summer.

On the other hand, the British government has made no preparations for labor shortages since Brexit. This has caused concern in the agriculture and livestock sectors.

According to data from the British Retail Consortium, food prices in supermarkets increased by 5.1% annually last month, surpassing the 4.4% rise in July.

On the other hand, the prices of fresh food products in the country surged by 10.5% in the same period, marking the sharpest increase since the 2008 financial crisis.

According to the projections of the Bank of England (BoE), annual inflation, which rose to a 40-year high of 10.1% as of July, is expected to increase further in the coming period.

According to July data, food prices in the UK increased by 12.7%, the highest increase in the last two decades.

While the bank expects annual inflation to reach 13% by the end of the year, the Resolution Foundation think tank predicts that inflation could reach 15% by the beginning of 2023.

In the face of rising food prices, the UK's leading supermarkets have been trying since April to keep demand alive by either reducing prices for some basic food products or keeping them stable until the end of the year.

British retail chain Morrisons has announced plans to reduce prices by 13% on average for about 500 basic food products, while Asda has announced that prices for some products would be fixed until next year.

Queues at food banks expected to increase

Experts predict that due to the recent increase in energy bills and food prices, more and more low-income people across Europe will have to be fed from food banks.

According to data of the European Food Banks Federation (FEBA), 860,000 tons of food aid was provided to some 12.8 million people through 335 food banks in 29 countries in 2020 alone.

Figures from the British parliament, meanwhile, indicated that 4.2 million households in the UK, which is among the most developed economies in the world, are defined as deprived of food security as of 2021.

In the country, this category includes those who cannot eat regular meals due to a lack of income.

Trussell, the charity organization to which 1,400 food banks are affiliated, provided food aid to 2.1 million people in 2022.

The number of people who had to apply to food banks in the country has increased by 81% compared to five years ago.

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