Food prices are the highest in 15 years in the UK, and something similar is happening in almost every country in the world.
The situation is expected to worsen as high fertilizer prices and lower yields due to reduced use could cause food inflation in 2023.
Food demonstrating that price increases cause nutritional deprivation for many people, as well as up to 1 million more deaths and 100 million people suffering from malnutrition.
The reason for this is not only the decrease in food exports from Ukraine and Russia, which is a smaller factor than feared for the increase in food prices. And unlike previous food prices, higher food prices may be here to stay. This could be the end of the era of cheap food.
Food and Fertilizer Market Scams
Although commodity prices have fallen from their peak in mid-2022, they remain high. At the end of 2022, the world market price of corn had risen by 29% from January 2021 and that of wheat by 32%.
This has fueled food price inflation; for example, in the UK, inflation was 16.8% in the year to December 2022. The rise is driven by higher energy prices and disruptions in international trade, both of which have strong links to the Russian invasion of Ukraine.
Sanctions and other war-related business disruptions have been very visible but seem to have diverted attention from the more important issue. Energy prices directly affect food prices by increasing the cost of agricultural inputs such as fertilizers, as natural gas is used to make nitrogen fertilizers and accounts for 70–80% of the total cost of producing fertilizers. In addition, farmers may respond by using less, resulting in lower yields and further increases in food prices.
Between 2021 and 2022, the price of urea (a general nitrogen fertilizer) nearly doubled and the price of natural gas more than doubled, although both are below their mid-2022 peaks. The changes led to cuts in nitrogen fertilizer production as factories became uneconomic, especially in Europe, where 70% of production capacity was cut impact in 2023 and beyond.
In our research, we tried to better understand how rising energy and fertilizer prices and export restrictions will affect food around the world in the future. We also wanted to determine how much damage the increase in food prices can cause to people’s nutritional health and the environment. We did this with a global land use computer model (LandSyMM), which simulates the impact of export restrictions and spikes in production costs on food, health, and farming.
We found that the biggest impact on food security is the increase in energy and fertiliser prices, while the decline in food exports from Ukraine and Russia has a smaller impact on prices. The combination of export restrictions and rising energy and fertiliser prices could cause food prices to rise by 81% from 2021 levels.
Such an increase would mean an increase in wheat prices in 2023 by the same percentage as in 2022. Although the price of wheat is only a fraction of the price of bread, the average price of a large loaf of bread in the UK rose from £1.09 at the start of the year to £1.31 at the end of the year. If inflation continues until 2023, that loaf of bread would cost £1.57.
Export restrictions make up only a small part of the simulated price increase. Stopping exports from Russia and Ukraine will increase food costs by 2.6% in 2023, while rising energy and fertilizer prices will lead to a 7.4% increase.
It is too expensive to eat well.
Rising food prices lead to poor nutrition for many, especially poor people. Our results suggest that if fertilizer prices remain high, there could be up to a million deaths and more than 100 million malnourished people. The death toll would rise the most in sub-Saharan Africa, North Africa, and the Middle East because people cannot afford enough food for a healthy diet.
Our modelling estimates that a sharp increase in the price of fertilizers, which are central to achieving high yields, would significantly reduce their use among farmers. Without fertilizers, more agricultural land is needed to produce the world’s food. By 2030, that could add 200 million hectares of agricultural land, the size of much of Western Europe combined (Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal, Spain, and the UK combined). That would mean much higher deforestation and carbon dioxide emissions and a huge loss of biodiversity.
Almost everyone feels the effects of rising food prices, but the poorest people in society suffer the most, who already find it difficult to get enough healthy food.
Fertilizer subsidies may seem like an obvious solution to a problem largely caused by high fertilizer prices. However, this only perpetuates a food system that has given us an obesity epidemic, left millions malnourished, contributed to climate change, and is a major factor in biodiversity loss.
Targeted measures to ensure the price of healthy and nutritious food for all can be more cost-effective to reduce the negative consequences of higher food prices and help transform the food system towards a healthier and more sustainable future
