Crises are often years in the making. But there’s typically one event that stands out as the flashpoint when the panic really began. For the global financial crisis, it was the collapse of Lehman Brothers. For the 2007-08 food crisis, the trigger was Vietnam imposing an export ban on rice. Importers panicked and, in a matter of days, rice prices doubled. Food riots soon followed from Dakar to Bangladesh.
The world is once again facing a critical juncture in food prices. Russia’s invasion of Ukraine has upended one of the world’s most important breadbaskets, pushing the cost of wheat to an all-time high. Vegetable oil and corn prices are also surging. Food-importing nations are understandably worried. Thankfully, there’s enough rice this time around for prices to remain subdued.
Rice matters because it’s the staple diet for half the world’s population, including about a billion undernourished people living in Asia and West Africa. The worst food riots during the 2007-08 crisis weren’t about the price of bread, but the cost of a bowl of rice. Right now, rice is all that’s standing between us and a full-blown food crisis.
The world can’t avoid a huge bout of food inflation, which will be extremely painful for food-importing nations such as Egypt, Turkey and Indonesia. Hunger will increase. Even developed countries will see sharp rises in supermarket prices. According to the United Nations Food and Agriculture Organisation, food prices have already jumped to a nominal all-time high. Even in real terms, adjusted for inflation, the FAO food index is just a whisker below the all-time high set in 1974. In the past year, wheat prices in Europe have surged nearly 65% in dollar terms, corn is up almost 38% and palm oil has risen nearly 55%. Yet, benchmark rice prices are down almost 20% during the same period.
