Off The Shelf #9: Feeling The Pinch

A grain shortage means that food inflation isn't slowing down, and it's hitting the poor hardest. Can anything be done?

Jul 02, 2022

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Every single day at work during at least the past year, I’ve talked, written or thought about inflation. How post-Covid prices have climbed, and haven’t slowed down. How it’s been made worse by Putin’s disastrous decision to invade Ukraine, and what all this means for the central banks who have the unenviable task of keeping inflation under control.

OK. Thanks for the lowdown Slothy, but you’re not exactly a frontrunner for the Nobel Prize for Economics. What’s this got to do with sustainable food?

Well, here we are, in a cost-of-living crisis – which is basically another word for inflation. Unfortunately, food is right up there as one of the sectors responsible for this overall level of inflation. And in a cost-of-living crisis, the one thing we can’t cut out of our way of living is food. As I’ve said before, sustainable food isn’t just about the environment. It’s about food security for all.

So we should all have our eyes wide open about what’s happening to food prices, and what this might mean for the people around us.

In the US, prices are now 8.6% higher than they were this time last year. Same in Europe. In the UK, it’s even worse, at 9.1% - the fastest price increases we’ve seen since 1982. And food is one of the worst affected sectors. Food prices grew faster here than anything else in May – even energy, the other major driver behind inflation. With both food and energy essential to lives and livelihoods, there really is no escape.

The mood is grim across the globe. In May, the UN secretary general warned of ‘the spectre of a global food shortage’. The governor of the Bank of England warned of ‘apocalyptic’ food price rises. Hearing policymakers and world leaders using words like ‘spectre’ and ‘apocalyptic’ doesn’t exactly fill me with confidence. And with The Economist leading with a feature on the ‘Coming Food Catastrophe’ a few weeks back, it’s not looking good.

But why exactly are food prices rising?

It’s a particularly potent cocktail – and not the sort with an umbrella.

☀️ Extreme weather is one factor: in China last year, planting was delayed by rain, meaning that the world’s biggest wheat producer looks like it may have its worst crop ever. Elsewhere, a complete lack of rain – in baking-hot parts of India, America, parts of Europe and the Horn of Africa (which is experiencing is worst drought in decades) – is impacting crop yields. Lower yields = less food supply = higher prices.

⛽️ Another reason is higher energy costs. Higher energy costs = more expensive transportation costs = higher end prices for the consumer.

⚔️ Enter, the war in Ukraine. Together, Ukraine and Russia account for nearly a third of global wheat supplies. Ukraine’s planting season has been seriously disrupted by the war, and Russia is under severe sanctions. Ultimately this is leading to a huge restriction in grain supply.

🚜 Then, there’s a fertiliser shortage, made worse by the war, since Russia and Ukraine export significant amounts of the stuff. This means the shortfall in grain is unlikely to be made up elsewhere in the world. Putting the environmental sustainability of fertiliser to one side (a topic for another week, perhaps), the reality is that the ability to grow grain anywhere is hampered.

⛔️ On top of all this, several countries are putting severe restrictions on exports, effectively stockpiling their own supplies. This is going to have a knock-on effect and could make the global situation worse.

Who’s hit the worst?

Unsurprisingly, the poor. Particularly in emerging economies: in Africa and the Middle East, food makes up a quarter or more of household budgets. In Egypt, bread is thought to account for almost a third of all calories consumed – and given that grain is the key commodity in short supply, the effects could be catastrophic as the situation fails to improve.

Closer to home, the UK Institute of Fiscal Studies has calculated that the poorest households actually experience a higher inflation rate than everyone else – more like 10.9%, rather than the headline 9.1%. This is because their budgets are lower in absolute terms, but they consume similar amounts of energy to everyone else. This means energy, which is getting more expensive quicker than other things, is a bigger portion of their expenditure. This leaves less left over for other stuff, including food, which is also getting more expensive.

In this context, UK food banks are now seeing more demand for food packages, and at the same time, donations are down – possibly another knock-on effect of the inflation which is making it so hard for lower earners in the first place. This has the potential to become a vicious cycle for the poorest households – and people haven’t even got their radiators on at the moment: remember we’ve got another winter looming.

What can we do about it?

Unfortunately, there’s not a lot we can do to stop extreme weather events, convince Vladimir Putin to see the error of his ways, or influence national policymakers to keep trade channels open. Which leaves us, as usual, with the small things we can control. Here are 10 ways to think about keeping your costs down on your weekly grocery shop, which could help in some small way. And if you can, it might be worth thinking about whether you can put an extra tin or two of chickpeas into the food bank basket next time you go through the checkouts – it might just help another household through this difficult period.

MORSELS

🐙 If you like octopus, you’re in luck

🍺 If you like craft beer, even this might be going too far

🍔 Forget independence… the SNP is waging a war on meal deals

ENTERPRISE SPOTLIGHT

Rather than look at one business this week, given the inflation theme, I thought I’d signpost a couple of links that might be handy if you want to try and do something about it.

Firstly, food banks. There are hundreds in the UK. Run by volunteers, they act as distribution hubs, taking donated food from those that can afford it, and providing packages to those that can’t. You can find your local food bank through The Trussell Trust. It couldn’t be easier if you want to volunteer or donate, or if you’re in need, you can get help here.

Secondly, there are a couple of apps out there which help to manage food waste, which ultimately means cost savings somewhere down the line. If you’re looking to bag a bargain, you could try downloading Too Good To Go, which saves restaurant food from the bin and sells it at insanely low prices. Or you could try Olio, a neighbourhood food sharing app, which goes both ways.

What else am I missing? Let me know in the comments.

Off The Shelf

Off The Shelf #9: Feeling The Pinch

A grain shortage means that food inflation isn't slowing down, and it's hitting the poor hardest. Can anything be done?

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