Food market insights: Pressure mounts on global food system
Farrelly & Mitchell is a food and agri-business consultancy empowering some of the world’s most ambitious companies and agencies to make the right decisions. Our work across the global food system gives us a unique bird’s-eye perspective. In this article we sift through the some of the current figures on inflationary pressures facing global food systems, the factors that have led to this and the outlook for the future.
What is happening?
World food prices rose by 28% in 2021 to their highest level in a decade and hopes for a return to more stable market conditions this year are slim according to the U.N.’s food agency. The Food and Agriculture Organization’s (FAO) food price index, which tracks the most globally traded food commodities, averaged 125.7 points in 2021, the highest since 2011 (131.9 points).
In the U.S., food retail prices have risen due to the pandemic and are forecast to continue to rise. Supermarket prices are expected to rise for staples including pasta, condiments, soups, cookies, produce dairy products and meats. The inflation rate was 7.0% in December 2021 — the highest in 39 years.
Data released in 2021 by the U.S. Department of Labor reveals that the overall Consumer Price Index (CPI) rose by 5.3% on an annual basis in August 2021 and food inflation by 3.7% in the same period. Beef and veal prices increased by 12.2% and pork prices by 9.8% while prices of poultry such as chicken and turkey rose by 7% year on year.
In Canada, meat is the category most impacted by price hikes. According to Statistics Canada, meat prices increased by about 10% over the last 6 months. Grocery prices continued to climb in December, rising 5.7% year over year, the largest annual increase since November 2011.
Prices have also increased for fresh fruit (+5.6%), including apples (+6.7%), oranges (+6.6%) and bananas (+2.5%) on a year-over-year basis. This is being driven by unfavourable weather conditions as well as supply chain disruptions.
With over 30 years of experience in the food and agribusiness sector, Director Déirdre Nic Carthaigh is an exceptional leader with an extensive track record in completing due diligence, feasibility, market entry, and growth assignments worldwide.
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