High food prices, strong dollar double burden for developing world: UNCTAD

High food prices, strong dollar double burden for developing world: UNCTAD

NEW YORK: As food becomes more expensive to import, it becomes even harder for developing countries to keep millions of people from going hungry. Food prices have hit record levels in 2022, creating challenges for food security worldwide, especially for people in the developing countries that import most of their food, according to a report by UNCTAD.

An index published by the UN Food and Agriculture Organization (FAO) tracking the prices of the most traded food commodities remained at historically high levels in November (135.7 points) after reaching an all-time high in March (159.3 points). Although the world has suffered food crises in the past, the current one, triggered by the COVID-19 pandemic and the war in Ukraine, is different, a new UNCTAD report says, because of a stronger US dollar.

During past crises, the value of the US dollar fell as food prices climbed. Since the dollar is the main currency for international trade, its devaluation lowered the final price in local currency that people paid for imported food. This provided some relief.

But the US dollar has gotten stronger this time, climbing 24% between May 2021 and October 2022 as the Federal Reserve increased interest rates to try to curb inflation