LatAm’s food crisis

Unprecedented food prices drag more people in Latin America into food insecurity.

A dark cloud looms over the bustling cities and rural communities of Latin America: the cost of sustenance is on the rise, with food prices soaring to unprecedented heights. The implications of this crisis are manifold, affecting not only the pocketbooks of the citizens of the region but also their health, education, and quality of life.

The root causes of this alarming trend are complex and multifaceted. They stem from a combination of global economic factors, including inflation, supply chain disruptions, and climate change-induced weather patterns that have led to poor harvests and reduced crop yields. But these extraordinary events only aggravated a trend which started in 2018 when most countries in Latin America suffered a currency devaluation and higher agricultural commodities prices during the Covid-19 pandemic.

A senior official at Mexico’s central bank did not expect the situation to improve on the near term, “The escalation of food prices will continue, although overall inflation has started to reverse the trend at the food level is not expected to stabilise quickly. The food basket and prepared foods have been responsible for a significant proportion of the sharp rise in inflation, which is estimated at 62%. The stressors, so to speak, continue to be primarily external shocks, clearly seen in the price levels of products such as wheat flour, where the supply chain is still affected, but also domestically there are impacts on food production due to the drought, particularly in the northern part of the country, affecting livestock, vegetables, and fodder production.”

“The escalation of food prices will continue, although overall inflation has started to reverse the trend at the food level is not expected to stabilise quickly.”

Senior official, Banco de Mexico

The war in Ukraine is a notable contributor to the food crisis as it has further increased energy and fertiliser costs. A director of food issues at a multilateral organisation explained, “Both Ukraine and Russia are sources of food, particularly grains, as well as fuels that also drive the food economy and food security in the world. The conflict has led to certain restrictions on the movement of grains, which has increased the price of these products on the market. Furthermore, Latin America has a low production of fertilisers, so we depend on imports of these inputs, many of which come from Russia. So, in an international scenario where there are restrictions due to the war between Russia and Ukraine and where there has been a significant devaluation of the currencies of several countries in the region, food prices have increased due to production costs. In addition, while we are a region that produces a lot of food, a large percentage of this food is exported so there is a dependence on food imports, which are becoming increasingly expensive.”

The impacts of rising food prices are particularly acute for those who are already struggling to make ends meet. For the millions of Latin Americans living in poverty, the cost of basic foodstuffs such as rice, beans, and maize has become prohibitively expensive. Families are forced to make difficult choices between putting food on the table and paying for other essential expenses such as healthcare and education. According to the International Monetary Fund (“IMF”), in a global context of tighter monetary policies, governments in Latin America may be forced to provide targeted fiscal support to reduce the impact of rising food prices in the region. These measures face the challenge of having to be addressed to the most affected without distorting standard prices. The Economic Commission for Latin America (“ECLAC”), the Food and Agriculture Organisation of the UN (“FAO”), and the World Food Programme (“WFP”) have also prepared a joint policy brief calling for the strengthening of agricultural production and social protection system in rural areas to combat food insecurity and rising extreme poverty while supporting food production.

“The countries that are faring the worst are those with the most restrictions on confinement, whether political or public order.”

Director, food issues, multilateral organisation

The situation is further compounded by the fact that many Latin American countries are heavily dependent on food imports. This means that even small disruptions in global supply chains can have significant impacts on local prices, as seen during the pandemic when borders were closed, and transportation and trade were disrupted. The director of the multilateral organisation explained that this was affecting some countries more than others, “The countries that are faring the worst are those with the most restrictions on confinement, whether political or public order. For example, Haiti has a very delicate public order situation that prevents the fluid movement of food, and even hinders food assistance. Another country that has difficulties in terms of food security is Cuba, where there are serious food shortages due to the island’s market restrictions with other countries in the region.”

This crisis also threatens to undermine the progress that has been made in recent years towards reducing poverty and inequality in the region. Latin America has made significant strides in recent years in increasing access to education, healthcare, and social services. However, rising food prices threaten to undo this progress, as families are forced to divert resources away from these essential services towards basic needs such as food. An expert in child malnutrition in Chile was increasingly concerned about the future for children across Latin America, “An increase in prices causes people to buy lower quality food, to have smaller portions, to skip a meal during the day, to buy more grains than proteins, or to put the food security of a family member at risk. This has a serious impact on health. Proteins are much more expensive than grains but are critical for development, inadequate intake of protein has both physical and cognitive impacts, especially on children.”

“An increase in prices causes people to buy lower quality food, to have smaller portions, to skip a meal during the day, to buy more grains than proteins, or to put the food security of a family member at risk.”

Child malnutrition expert, Chile

The rising cost of food in Latin America requires urgent attention and action. Addressing this issue will require a concerted effort from governments, the private sector, and civil society. It will require innovative solutions, including investment in local food production, increasing access to credit and finance for small-scale farmers, and improving infrastructure to support trade and transportation.

Most importantly, it will require a commitment to equity and social justice. The most vulnerable members of society, including women, children, and indigenous communities, must be prioritised in any efforts to address this crisis. Only through a collective effort can we ensure that all Latin Americans have access to the basic human right of affordable and nutritious food.

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