As the coronavirus pandemic penetrates more deeply into global supply chains, prices for key staples are starting to soar in some parts of the world. Rice and wheat — crops that account for about a third of the world’s calories — have been making rapid climbs in spot and futures markets. For countries that rely on imports, this is creating an added financial burden just as the pandemic shatters their economies and erodes their purchasing power. In Nigeria, for example, the cost of rice in retail markets soared by more than 30% in the last four days of March alone.
It’s unclear what the biggest drivers were for the retail prices, whether it was a trickle-down effect from grain futures or local logistical choke points or panic buying, or a combination. What is clear is that, while the world isn’t about to run out of food anytime soon, anxiety over policy makers’ ability to deliver it to the right place at the right time and at the right price is mounting.“Without the coronavirus, there would not be any problem whatsoever,” said Stefan Vogel, head of agricultural commodity research at Rabobank International. “People are getting worried about the supply chain.”
Most price measures in the broader economy at the moment are moving things in a different direction. There are concerns over deflation as the pandemic shutters businesses, sparks unemployment and unravels the oil market. In fact, a gauge of global food costs fell sharply last month, primarily a ripple effect from the energy plunge which cripples demand for crops like sugar that get turned into biofuels.