Food Price Inflation
Consumers around the world are feeling the effects of rising food prices. Sparked by COVID-19 disruptions, prices have continued to rise as a result of additional supply and demand factors. On the supply side, economists point to global labor shortages, transportation bottlenecks, and higher prices for inputs. At the same time, dry weather and natural disasters have impacted key producing countries. Russia’s invasion of Ukraine is further disrupting supply chains and according to a World Bank report, continues to affect prices of grain and critical agricultural inputs such as fuel, chemicals and fertilizers. While the global food supply has been constrained, global demand is rising – creating higher prices for food.
Despite hopes that the world would emerge more quickly from the COVID-19 pandemic and food security would begin to recover, world hunger rose further in 2021 according to the latest United Nations report.
We recognize the volatility of food prices and the challenge it’s posing to consumers worldwide and we are focusing on the areas where we can have the greatest positive impact: providing a consistent food supply and strengthening the resilience of the food system to mitigate disruptions. For 157 years, Cargill has kept food moving around the world – through droughts, recessions, pandemics, and armed conflicts. By connecting farmers with markets, customers with ingredients, and people and animals with the food they need to thrive, Cargill is committed to doing everything we can to keep food moving.
The food system won’t function without farmers, ranchers, food workers, and customers. We have increased our investment in our farmer producers around the world, providing tools and training to help manage risk, improve efficiency, and withstand extreme weather events. We continually partner to develop innovative ways to improve food production and reduce costs, such as investing in technologies like Smart Manufacturing, predictive analytics, and robotics, to name a few. Cargill is also actively working with governments to identify solutions to supply chain bottlenecks, such as infrastructure challenges and labor shortages. At many of our facilities we are increasing wages and improving benefits such as childcare, training, transportation, and housing. Working to ensure enough food is available to the global market is one way Cargill is doing our part to address food price inflation.
Cargill is also helping to minimize inflation’s impact by helping farmers and customers successfully manage risk and volatility, and address disruptions to keep them operating. This is critical to ensuring food is moving through the supply chain and continues to feed families across the globe. For example, when transportation capacity is low and prices are on the rise, we tap into our global network of transportation partners to adjust routes, use alternative modes of transport and diversify our ports of export to keep food moving to our customers and communities at minimal cost.
Providing a consistent food supply also requires open trade. Limiting the supply and movement of food across borders raises the price of food and further limits its ability to reach people who need it. Cargill advocates that free, rules-based trade allows farmers and industry to manage risk, produce food where it is best grown, market it to where it is needed, and make decisions based on supply and demand. This ensures the lowest prices for consumers. Connecting farmers and ranchers to global markets – and governments working to keep those markets open – is critical in helping us feed families around the world, especially in the most vulnerable places. The world produces enough food to keep everyone fed, but we need open trade to move food most cost effectively to those who need it.
At Cargill we know that inflation disproportionally affects populations already facing hunger and food insecurity, so we have stepped up our global partnerships and community investment. Cargill contributed more than $163 million in FY 2022 to strengthen food security, improve farmer livelihoods and support urgently needed relief and resilience in the communities where we operate.