Global Food Prices Could Stay High Into 2027. Here’s Why | The Palki Sharma Show | IGR — Transcript

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1. 0:02Is a food crisis coming? A global shock
2. 0:05is spreading across the planet. The wars
3. 0:07are reaching your kitchen. The wars in
4. 0:09Ukraine and West Asia together, they
5. 0:11have pushed up the cost of fuel and
6. 0:13diesel. And now that shock is ripping
7. 0:16through supply chains. More importantly,
8. 0:18it has entered your food bill and there
9. 0:20is no immediate relief in sight. But how
10. 0:23did this happen? How did these conflicts
11. 0:25end up on your plate? In two ways. one
12. 0:28through the roots that carry your food
13. 0:31and two through the energy that helps
14. 0:33farmers grow that food. We'll begin with
15. 0:36the roots. The biggest disruption is in
16. 0:38the Black Sea. This region has a massive
17. 0:41grain infrastructure. These facilities
18. 0:44have come under attack and this has
19. 0:46disrupted wheat shipments.
20. 0:49The Russia Ukraine war has entered its
21. 0:51fifth year. The Black Sea has become a
22. 0:54choke point and that is bad news for
23. 0:56global food supplies because the Black
24. 0:58Sea is where the world's grain passes
25. 1:00through.
26. 1:0217 17% of the world's traded grain. It
27. 1:06used to come from Ukraine and Russia.
28. 1:0717%. But now that supply is disrupted.
29. 1:11We have data from the month of August.
30. 1:12Ukraine's Black Sea ports recorded just
31. 1:1521 ship calls. Meaning just 21 ships
32. 1:18reached these ports in August. last year
33. 1:22compared to last year. That's a fall of
34. 1:2490% in traffic.
35. 1:26That's because these places came under
36. 1:28attack. Same with Russia. Ukraine has
37. 1:30attacked Russia's grain ports. So, wheat
38. 1:32supplies from Russia are also paralyzed.
39. 1:35In recent days, these strikes have
40. 1:37escalated. Look at the last 10 days. Six
41. 1:40ships have been attacked in the Black
42. 1:42Sea. Six ships in 10 days. And lives
43. 1:44have been lost. In just a week and a
44. 1:46half, more sailors have died in the
45. 1:48Black Sea than American personnel in the
46. 1:51entire West Asia war. So the Black Sea
47. 1:54is becoming a very dangerous flash
48. 1:56point. And this is hurting wheat
49. 1:58exports. None of the grain is moving
50. 2:00here. So there is a shortage in global
51. 2:02markets and prices have soared.
52. 2:05Wheat prices have gone up by more than
53. 2:0730% this year. 30%. And that is why your
54. 2:11food costs more. That's the first
55. 2:13factor, the shipping disruptions.
56. 2:16The second factor is the rising cost of
57. 2:18energy. The war in West Asia has pushed
58. 2:20up fuel prices. This has hit food
59. 2:22supplies in two ways. A fertilizers have
60. 2:25become more expensive.
61. 2:27Fertilizers are made using natural gas.
62. 2:30They're exported through the straight of
63. 2:31Hormuz. The strait has been shut for a
64. 2:33while. Gas prices have gone up. So,
65. 2:35fertilizer prices have also gone up. The
66. 2:37result, farmers have to pay more to grow
67. 2:40their crops. and you have to pay more to
68. 2:42buy those crops. Plus, diesel is in
69. 2:44short supply. It's a fuel that is not
70. 2:47just used in cars. Diesel powers the
71. 2:49global economy. It runs farm machines.
72. 2:51It powers irrigation and it moves food
73. 2:53from the farm to the shop. Now, diesel
74. 2:56prices have touched the sky and that
75. 2:58cost is squeezing what farmers earn.
76. 3:03So, these are the two reasons why food
77. 3:04is getting more expensive.
78. 3:07How long will this go on and how bad can
79. 3:09it get? It's time for a forecast.
80. 3:14Food prices will stay high well into
81. 3:172027. And here is why we say this. The
82. 3:20world is not suddenly growing less food.
83. 3:22There is no obvious shortage of that
84. 3:23kind. The problem is the machinery
85. 3:25behind it. The systems that produce
86. 3:27food, the systems that move it and pay
87. 3:30for it, they're all under strain all at
88. 3:32the same time.
89. 3:34Another problem is El Nino. It's a
90. 3:36weather phenomenon. It is triggering
91. 3:38extreme droughts and floods. This is
92. 3:40impacting crop harvests and that is
93. 3:43hitting global supplies. Yet another
94. 3:45problem is hoarding. When countries face
95. 3:48a shortage, they start hoarding food
96. 3:50grains. It's an obvious reaction. When
97. 3:52there is a shortage at home, countries
98. 3:54would cater to their citizens first,
99. 3:56meet the demand at home before shipping
100. 3:58overseas. And that tends to make these
101. 4:01shortages worse. In fact, it's happening
102. 4:03already. Look at China and Russia.
103. 4:06They have tightened export rules. They
104. 4:08have imposed various forms of export
105. 4:10kotaas, duties and license requirements
106. 4:14and the strain is already showing. In
107. 4:16Indonesia, rice prices have hit record
108. 4:19highs. In Egypt, prices of bread are
109. 4:21going up and in India too, the impact is
110. 4:24showing. We've experienced a weak
111. 4:26monsoon. Sugar prices have hit new highs
112. 4:28and the government is being forced to
113. 4:30make tough choices.
114. 4:32India has told its oil marketing
115. 4:34companies to cut the use of sugar. What
116. 4:37are oil marketing companies doing with
117. 4:39sugar? They're making ethanol blended
118. 4:41fuel. But now the use of sugar to make
119. 4:44ethanol is no longer allowed. The
120. 4:47government wants more sugar for
121. 4:49consumers.
122. 4:51As the news came in today, shares of
123. 4:52Indian sugar companies fell. So to sum
124. 4:55it up, the world is not running out of
125. 4:58food. The world is running out of ways
126. 5:00to produce and supply it properly. And
127. 5:02that is why the pressure on your plate
128. 5:04is set to grow.