Context:Covid-19 pandemic induced panic buying, food hoarding and protectionism could amplify the risk of worldwide food shortage and spike in global food price.
Reasons behind Food Price Hike
Supply shock to global grain stockpiles: Because of disrupted food production and distribution.
Increased cost of farming and risk of bad harvest: due to absence of animal feed, fertilizers, & pesticides.
Labour and transportation shortages: Due to cross-border travel restrictions, which will disrupt seasonal cycle of migrant farm workers.
Export bans or quotas andstockpiling through imports.
Food Protectionism: World Bank estimates that protectionism accounted for about 40% of the increase in the global price.
Covid-19 pandemic has accelerated the rate of food price hike because of falling growth, rising unemployment, widening fiscal deficits, and soaring debt in advanced and emerging economies.
Low-income countries: with stop in capital and remittance inflows and a collapse in tourism are highly vulnerable to a spike in food prices.
Global Initiatives to curb Food Price Hike
Multilateral institutions lead emergency loans facility.
Temporary suspension of debt-service payments from poor countries by Group of 20 creditors
Way Forward
Reconfiguration of supply chain by farmers, away from bulk wholesale (to restaurants, hotels, and schools) toward grocery stores and home delivery.
Extension of Temporary debt relief to other countries apart from poor countries.
Global policy coordination is essential to prevent food protectionism.