Food prices have risen 15% in Brazil, it’s highest level in two decades, while UN data shows they’ve jumped across the board in 2020.
“The Cereal Price Index averaged 115.7 points in December, up 1.3 points (1.1 percent) from November, marking the sixth consecutive monthly rise,” UN said, adding:
“Wheat export prices rose further in December, reflecting tightening supplies among major exporters, concerns over growing conditions in parts of the United States of America and the Russian Federation as well as expectations of lower than-earlier-anticipated wheat shipments from the Russian Federation following its announcement of an export tax/quota.
Among coarse grains, sorghum prices rose sharply in December, as sales from the United States of America, mostly to China, remained robust. Maize export prices moved higher, sustained by continued concerns over crop prospects in South America, with a spillover from sharp increases in soybean prices adding further support.
International rice prices also rose in December, underpinned by tight Thai and Vietnamese availabilities and heightened buyer interest for Indian and Pakistani supplies.
For the year as a whole, the FAO Cereal Price Index averaged 102.7 points, up 6.4 points (6.6 percent) from the 2019 average and marking the highest annual average since 2014.
Tighter supplies and stronger demand raised wheat and maize prices by 5.6 percent and 7.6 percent respectively compared to 2019. In the case of rice, although global import demand remained lackluster in 2020, export prices rose 8.6 percent above their 2019 subdued levels to a six-year high.”
Russia imposed a cap on food prices last month while partially empty shelves are reported in Britain following their year long lockdown.
While during summer a gigantic locust swarm hit Africa, ravaging crops in their way for months.
“Food inflation is a reality. While people have lost income, they are as we speak going through a tremendously difficult hardship… The real impact is the access to food. People have lost their income. There are a lot of unhappy people and this is a recipe for social unrest,” said Abdolreza Abbassian, a senior economist at the United Nation’s Food and Agriculture Organisation.
An easing of lockdowns does not appear to be on the cards any time soon for northern Europe, likely increasing prices due to supply chain disruptions.
This could cause difficulties in developing nations, with Brazil seeing a huge jump in food prices after its own strict lockdowns.
The situation is expected to get worse as winter progresses, but they are not near Arab Spring levels yet.
Those levels however arose out of a 5% GDP contraction in America and Europe. For 2020, the economy has contracted by 10% and in some wealthy countries even by 20%.
That may have significant ripple effects down below which can increase social pressures as the depression level contraction for some countries begins being felt.
This may be partly why bitcoin’s adoption in Nigeria has been accelerating both to take part in the global economy but also as a safe store of value if things go south.
Brazil has been a significant crypto market as well since at least 2018 with Americans in particular accelerating bitcoin adoption in late 2020.
In situations of local unrest you might expect some of the wealth to be transferred to bitcoin for easier transport, but just how much worse the situation might get remains to be seen as food prices are expected to continue increasing.