On Wednesday, the World Trade Organization (WTO) released its Global Trade Outlook report, which showed food prices soared 18% globally last year, including a 21% increase in the cost of grain.
Fertilizer prices increased even more, surging 63% year over year, according to the report. Although the report noted that higher food costs, in theory, “should encourage more agricultural production, resulting in greater availability and lower prices for food in the future,” the increasingly expensive costs of fertilizer could lead to farmers reducing fertilization to cuts costs, and that could reduce crop yields and ultimately lead to new price spikes.
The report also noted food prices have been volatile over the past year, initially surging 19% from January until May, following February’s initiation of the military conflict in Ukraine, and then falling 15% from May until December.
The report went on to note that although “global food supplies are less precarious than many had feared” the continue to “remain a cause for concern.” According to the report, for example, the volume of wheat trade globally dropped by about 7.5% since 2021, and that leaves “little margin for error if a major producer suffers a crop failure or climate-related natural disaster.”
WTO Director-General Ngozi Okonjo-Iweala called upon the more advanced nations to be vigilant in looking for signs that the food crisis has begun to cause hunger in less developed nations. She also called on all nations to lift export restrictions on food and fertilizers, which she noted were still in place in 67 countries as of April of 2023.
She also warned that worldwide, trade will likely “remain under pressure from external factors in 2023.” she said these factors will include the conflict in Ukraine, the impact of increasingly hawkish monetary policy, price inflation, and other geopolitical tensions.
She concluded, “This makes it even more important for governments to avoid trade fragmentation and refrain from introducing obstacles to trade. Investing in multilateral cooperation on trade… would bolster economic growth and people’s living standards over the long term.”
