The global food price index has been on the rise for eleven months now. In 2021, food prices have escalated to their highest levels in six years. According to the UN body, Food and Agriculture Organization (FAO), food prices in January marked the sharpest month-over-month and year-over-year rise in 10 years. The April figure is the highest of any month in almost seven years.
What are the reasons for this price surge?
There are several reasons driving up prices, which include –
- COVID-19: The production was disrupted as the virus spread worldwide.
- Palm oil prices: Palm Oil prices are driving the spike in the index since the 4th quarter of 2020.
- Sugar and Cereal Prices: Sugar and cereal prices have shown a significant increase in the past few months.
- Worsening crop prospects in the US and Latin America. For example, Maize prices are at their highest since 2013 due to lower production in the US.
- High-Demand: High demand from countries like India and China. For example, strong demands from China for cereals, like sorghum and corn, led to an increase in their prices.
- Slow harvest in Brazil: This caused a spike in sugar prices by almost 4% in April.
- Falling mineral oil prices: Falling mineral oil prices also factored into the initial deterioration of food prices.
- Dry weather: Dry weather in South America and Brazil is worsening the outlook for different crops, causing food price spikes.
Rising food prices benefit businesses higher up the supply chain ladder, such as – fertilizer producers, but it reduces margins for businesses lower down the ladder, such as businesses that directly deal with the consumers. It also affects the consumers’ household income as their spending on food increases.
How technology can reduce food inflation.
Technological innovations, such as improved irrigation technology, precision agriculture, vertical farming, farmland and timberland carbon credit programs, alternative proteins, non-toxic and sustainable crop chemicals, fertilizers, intelligent software programs, and data analytics, can help bring down food inflation.
For example, Benson Hill uses data analytics and artificial intelligence, predictive breeding, and environmental modeling algorithms to optimize various plant characteristics. This reduces costs and improves accessibility. Their procedures are sustainable too, as fewer processing steps and the need for additives are involved.
Another example is TartanSense, which unlocks value for small farm holders by providing AI-powered robots that facilitate data-driven decision-making on-field and comes equipped with advanced features, such as – precision sprayers for weed, insect, and disease control.
It is important to accelerate technology dissemination, especially regarding climate change, environmental sustainability, crop yields, and mechanization. The increased adoption of technology will reduce dependence on costly inputs, chemicals, labor and stimulate food supply.
For instance, Irrigation providers can raise agricultural productivity by using efficient irrigation technology to increase the total irrigated area.
The sustainability dilemma
Intensive agriculture can have a negative impact on the environment. For example, there remain several concerns over the use of biotechnology in the field of agriculture, even though it can improve food safety and help address several challenges. It is feared that it can have long-term negative effects on the crop biodiversity and environment as a whole.
Before implementing any technology, a thorough understanding of its environmental impact can result in production gains without detriment to the environment.
Meeting the global demand while limiting greenhouse gas emissions requires increased application of data and technology on the farm and within the global supply chain. The agriculture industry must embrace new technologies that generate higher yields using fewer resources while also addressing the worsening food insecurity crisis.