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High energy and food prices will remain at “historically high” levels until the end of 2024 as a result of the war in Ukraine, the World Bank said in a recent report.
An ever closer war. The latest World Bank (WB) report, entitled “Commodity Markets Outlook”, forecasts that energy prices will increase by more than 50% in 2022 and then moderate in 2023 and 2024, while non-energy products, including agricultural products and metals, will increase by almost 20% in 2022.
“Taken together, this represents the biggest commodity crisis we’ve experienced since the 1970s,” said Indermit Gill, World Bank Vice President for Equitable Growth, Finance and Institutions.
But the agency says that if the war drags on, prices could rise further and show even more volatility. By 2022, wheat prices are expected to rise more than 40% and metals 16%, the report details.
“The resulting rise in food and energy prices is exacting a heavy human and economic toll, and is likely to slow progress in reducing poverty. Rising commodity prices are exacerbating already high inflationary pressures. around the world,” said Ayhan Kose, director of the World Bank’s Outlook Group.
Latin America is a large importer of fertilizers, and taking into account that Russia is the largest producer of nitrogenous fertilizers and the world’s second largest supplier of potassium and phosphorus fertilizers, the impact will hit producers in the region and could make a good part of the prices more expensive. food.
“The direct impact is the increase in fertilizer prices, where it has been felt more. This has led producers to reduce the purchase of these inputs, yields fall and final prices increase. Agro-inputs represent the 40% of the cost of production for producers of vegetables and basic grains,” Guillermo Gutiérrez, coordinator of the sustainable food system of the Rikolto organization, told France 24.
After being asked about a possible shortage, the analyst explained that it is likely if input costs become unsustainable for food producers in the region. “If the small growers find production unprofitable, that’s where we’ll have a shortage,” he added.
Rising food prices will put pressure on developing economies that depend on wheat imports, especially those from Russia and Ukraine.
“This will have lasting spillover effects. The sharp increase in the prices of inputs, such as energy and fertilizers, could lead to a reduction in food production, particularly in developing economies. Reduced input use will affect food production and quality, which in turn will affect food availability, rural incomes and the livelihoods of the poor,” concluded John Baffes, Senior Economist at World Bank Outlook Group.
with EFE
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