Ehlert Logo

14. September 2021

Climate change means higher food prices

The weather is becoming increasingly unbalanced – coffee farmers in Brazil are worried The worries are not unfounded: since March […]

The weather is becoming increasingly unbalanced – coffee farmers in Brazil are worried

The worries are not unfounded: since March there has been a drought of the century in the land of Arabica coffee beans. The farmer Mauricio Pinheiro and many others had to dig new wells and reduce the already scarce water in everyday life. After all, the plants should be kept alive, as they represent the main source of income. In the Brazilian summer, which runs from January to April, there has never been so little rain in the coffee-growing regions since the weather began.

The tragedy goes even further: when winter begins in May in the southern hemisphere, the next problem will appear on the horizon. Then the drought is no longer critical. Instead, frost threatens from freezing temperatures at night. This means certain death for young coffee plants and seedlings. Coffee farmer Joseph Reiner told Bloomberg news channel that 120,000 of his 200,000 seedlings had been destroyed – he had only planted them last year. Other growers expect harvest losses of 30 percent. And that for years to come, because the coffee bean seedlings destroyed by the frost have to be sown again.

It is not only in this part of the world that there are worry lines

All over the world, the weather is causing a lot of grief right now. Due to a drought, the wheat harvest in Canada is lower than it has been in 30 years. The United States has had the smallest oat harvest since records began in 1866, and in China, excessive drought is damaging pig farming.

But the agricultural experts are not only concerned with the long-lasting drought: Due to heavy rainfall in Germany, they fear that parasites and fungi can now spread unchecked in the fields.

Prices at the Mercantile Exchange in Chicago

Due to the extreme weather, the prices are of course also increasing:

  • Coffee: + 60%

  • Corn: + 60%

  • Soybeans: + 54%

  • Sugar: + 47%

  • Wheat: + 22%

These are the prices of the Mercantile Exchange in Chicago, where world market prices for agricultural products are set.

Controversial effects on German prices

Consumers are currently not feeling the price increases in all supermarkets. According to the International Monetary Fund, it could take between 6 and 12 months before consumers notice the effects when shopping – i.e. in 2022.

But why is that so? The first reason is that many agricultural raw materials such as wheat or soy are first processed before they end up on the supermarket shelf as bread or tofu. The second reason: At this point in time, the dealers are still being supplied on the basis of old contracts. As soon as new trade deals are signed, soaring prices are also an issue.

However, it is not certain that food prices for consumers will increase. Robert Kecskes from the market research institute GfK (Growth from Knowledge) says that at least part of the increased procurement costs must be passed on to consumers.

The AMI (Agrarmarkt Informations-Gesellschaft) contradicts: On request it says that many other factors also play a role in the pricing of processed foods. Taking Germany as an example, these are the energy prices, which have risen due to the CO2 tax, and the base effect triggered by the reduction in value added tax. These two aspects can also be responsible for the rising prices.

World hunger: 811 million people are affected

More expensive foods? This has not yet been shown with fresh products. Overall, there was only an increase of 0.5% compared to the previous year. This has been shown in the case of individual products:

  • Eggs: + 9.1%

  • Poultry: + 7.4%

  • Potatoes: – 7.4%

The influence of the current weather on the cultivation of grain, fruit and vegetables in Germany cannot yet be foreseen. Regional failures are possible according to the AMI. For example, some vineyards and grain fields may have been destroyed by the flood disaster in Rhineland-Palatinate. According to experts, however, there is no risk of worse crop losses.

From a global perspective, the picture does not look much better: In the World Food Report published by the UN about 5 weeks ago it becomes clear that around 811 million people are hungry around the world. That is 8.4% more than last year.

Groceries from a single source – Ehlert offers it

Are you looking for fresh vegetables, golden grains or other foods for your production? Then you have come to the right place at Ehlert. Whether you produce tasty dishes or sell them in your restaurant – you don’t have to worry about price concerns with us. In cooperation with well-known partners such as Develey, Homann or Pfanni, you get everything from a single source.

Stay up to date with the latest information on groceries, subscribe to our newsletter or follow Ehlert on social media. We look forward to you.