The impact of the COVID-19 pandemic disruptions and the spread of the Delta variant is now reflecting in food prices. Shortage of workers, extreme weather events, breakdown of supply chains, and rising inflation are all contributing to soaring prices of food.
World food prices were on a decline over the last two months after increasing for nearly 12 months straight. However, the UN Food and Agriculture Organization (FAO) on September 2 said the prices began picking up again in August.
The FAO food price index, which tracks the prices of the most traded food commodities in the world, was 123.5 points in July as against 127.4 points in August. Prices of food in August were 32.9 percent higher than the previous year.
While heatwaves and floods have affected crops across the world, from the US to Italy and even Brazil, labour shortages are proving to be another immediate concern. The lockdowns have severely affected well-established supply chains in many countries.
Malaysia's palm oil production fell by 30 percent due to a shortage of workers, 20 percent of tomatoes in Southern Italy were ruined as they were not harvested on time and also because of poor transportation, Bloomberg reported. Meanwhile, shrimp production in South Vietnam fell by over 60 percent, it added. Several other food items across different regions witnessed circumstances, with countless tonnes of production lost.
The labour shortages that these nations are facing are not new but only compounded by the pandemic restrictions. Agricultural work is seasonal, back-breaking, pays little, and has only a few benefits to offer. As a result, most of the positions are often filled by migrants, many of whom come to countries like the UK and US illegally.
As economies develop, individuals try to learn skills and land high-paying jobs in the cities. Jobs like farmhands find fewer takers. Therefore, these vacancies are usually picked up by migrants.
It is estimated that 73 percent of the workforce in US agriculture comprises immigrants. Of the entire agricultural workforce in the country, nearly 50 percent are undocumented migrants.
However, recent anti-migrant regulations and rhetoric across the Western hemisphere made the inflow of migrants smaller, and the lockdowns restricting movement from one country to the other almost completely halted the flow of workers. When shutdowns were lifted, many workers made their way back home as they were stuck without support or pay on foreign soil.
Now, nations like the UK, US, Australia, Italy and others that traditionally rely on immigrants in their agricultural sector are starting to feel the pressure.
Wages in the sector aren't high enough to compensate for the effort put in. Therefore, the sector is gradually increasing the wages being offered to workers. A similar effect is also being witnessed across other traditionally low paying jobs in restaurants, hospitality and other associated sectors.
As margins often remain thin, the increased costs are all but expected to be passed on to the consumer. Inflationary pressures, transitionary or not, are compounding the price pressure.
But for countries like India and China, where there is an abundance of labour, significant price pressures aren't expected outside of inflationary rise apart from outlier regions.
However, domestic migrants, who make up a significant portion of the agricultural workforce in India, have suffered catastrophically since March 2020 due to the lack of support and dwindling wages. There is also no comprehensive data to show how badly they were affected.
(Edited by : Kanishka Sarkar)
First Published: IST