lady holding vegetable box

Global food security and price inflation

Darren Rigden, Partner, Audit and Business Solutions
18/05/2022
lady holding vegetable box

The Bank of England is warning of global food shortages sparked by the continued war in Ukraine, with prices rising at the fastest rate for 30 years.

This is a real concern for people, whether you are planning your family budget or running a multination food corporation.
Food security covers affordability, availability and quality of food across the globe. The global food security index considers the issues of food affordability, availability, quality and safety, and natural resources and resilience across a set of 113 countries. The UK actually scores:

4th terms of affordability

11th for availability

14th for quality and safety

6th for natural resources and resilience

Yet despite this 2.5% of the population is under nourished according to the index which is set to get worse with increasing food prices.

Good food security would normally be led by encouraging diverse and more natural farming methods, helping to improve the health of the soil and livestock through the reduced use of chemicals and antibiotics.

Wars are often the largest contribution to food insecurity along with climate change, both very topical at the moment. In this instance, this has been worsened by the pandemic interrupting supply chains resulting on higher shipping prices. Ongoing restrictions due to COVID-19 outbreaks in China have continued to impact supply chains.

In recent months, inflation and predicted shortages have been at the forefront of headlines with record numbers having to use food banks or significantly curtail their weekly food budget. The rising prices are also likely to have a negative impact on producers – price and food security uncertainty often means farmers invest less with a knock-on impact on future supplies.

So what can be done?

In reality, it will be hard to have a significant impact in the short term other than through government support for the hardest hit. In the medium to longer-term, governments need to think about encouraging and supporting farmers and food processors with investment, research and development and more sustainable and diverse agriculture. Trade policies can also have unintended consequences and should be reviewed so as to encourage more sustainable food production and less ‘food miles’ where possible.

Food waste has been on the agenda for some time and this could have a significant impact on both food prices and availability. The plastic tax, while encouraging some companies to become ‘greener’ may also have unintended consequences as some foods simply last a lot longer in existing plastic-based packaging; until new products are developed if they are not used there is a real risk that more food could go to waste. Perhaps the government could encourage the production of new packaging materials aimed at longer life and sustainability through tax incentives such as an enhanced R&D tax credit.

As always, diversifying supplies and types of crops is always sensible and would protect against many of the issues that have resulted in food shortages.

Conclusion

Rising prices and food security is not a new issue, it has been raised time and time again, but perhaps now we are heading for a perfect storm resulting in bigger rises than we have seen for some time, which might make governments around the world step back and prioritise food security.

How can Crowe help?

Our team are experienced in helping businesses in the food and beverage sector adapt to challenges so that their businesses can continue to run smoothly, and they can assist you in developing a contingency plan to respond to the current uncertainties, please contact Darren Rigden or your local Crowe contact.

Contact us

Darren Rigden
Darren Rigden
Partner, Audit and Business Solutions
Kent