• Monday, July 22, 2024
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BusinessDay

Global food prices surge on Black Sea grain deal collapse

Food inflation will persist until crops germinate, says Agric Minister

The global food price index ticked up in July after Russia reneged on the Black Sea grain deal that allows safe passage of ships carrying grain from Ukrainian ports, the UN Food Agency said.

The Index which tracks the monthly international prices of cereals, vegetable oil, dairy, meat, and sugar averaged 123.9 points in July, up 1.3 percent from June. The increase was driven by a rise in vegetable oil and rice prices.

“Vegetable Oil Price Index registered a 12.1 percent jump in July after seven months of consecutive declines,” the report said.

“Sunflower oil prices rebounded by 15 percent due to uncertainties sparked by Russia’s decision to pull out of the Black Sea Initiative on grain and fertilizer export,” it added.

The UN-brokered deal, together with a parallel accord between the UN and Russia, provided a lifeline for hundreds of millions worldwide facing hunger and spiralling food costs, including in countries such as Afghanistan and Ethiopia.

However, Russia pulled out of the deal on July 17, saying it will attack any ship leaving the black sea region.

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The cereal price index declined by 0.5 percent in June as coarse grain quotations due to increased seasonal supplies of maize from Brazil and Argentina declined by almost five percent and the potentially higher-than-expected production in the United States.

According to the Food and Agricultural Organisation (FAO), wheat prices rose for the first time in nine months due to uncertainty over exports from Ukraine and continued dry conditions in North America.

“Meanwhile, rice prices increased by 2.8 percent in July and by almost 20 percent over the past year after India prohibited exports.

FAO warned that the move “raises substantial food security concerns for a large swathe of the world population, especially those that are most poor and who dedicate a larger share of their incomes to purchase food.”

The Sugar Price Index declined by nearly four percent, the result of good progress in Brazil’s sugarcane harvest, improved rains across most growing areas in India, and subdued demand from Indonesia and China, the world’s top importers.

There was also a 0.4 percent slide in the Dairy Price Index, which is more than 20 percent below the July 2022 value. Similarly, meat prices dropped 0.3 percent since June.