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Worldwide increases in cereal and vegetable oil prices have contributed to higher food prices. After the numbers have skyrocketed over the past two months, they have reached their maximum in ten years. informs Reuters citing data from the UN Food and Agriculture Organization (FAO).
According to FAO, which tracks world prices for the most sought-after food items, the food price index averaged 130 points last month, the highest since September 2011. In September, prices rose 32.8%.
Crop failures and strong demand from China contributed to the rise in prices in the world market. The cereal price index in September increased by 2% compared to the previous month. This was facilitated by an increase in wheat prices by almost 4% – in FAO, the growth is explained by a decrease in export supplies amid strong demand. Global vegetable oil prices rose 1.7% month-on-month and showed an increase of about 60% year-on-year.
World sugar prices rose 0.5% in September, according to FAO, amid concerns over unfavorable weather conditions for crops in Brazil, the world’s largest exporter.
As before explained The Insider Valery Kizilov, Russian food markets are closely linked to world markets, so what happens to prices affects the life of the country. The Russian government sometimes tries to cut off the domestic market from the world market in response to price increases. Most often, this is done precisely in order to keep domestic prices from rising. The most common mechanism is export restrictions, quotas. As a result, prices in Russia are rising out of sync with world prices, but lagging behind.
According to Kizilov, in the future, the negative effect of such measures will become noticeable, since they are very difficult for domestic producers. The result is an unprofitable situation in the long term, the natural reaction to which is, for example, a reduction in acreage, crops, a decrease in investment in increasing productivity, the purchase of equipment and the development of new varieties. In addition, the gap between internal and external prices creates incentives for corrupt transactions, for example, the creation of special exporters.
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