Title : Analysis of current food price developements, its drivers and profiteers against the background of the Russian invasion of Ukraine
This study aims to analyze the change of food prices that occurred as a result of the Russian invasion of Ukraine. In this context, cost developments and their drivers are analyzed in order to identify the potential profiteers at various points in the supply chain. Additionally, the implications of these changes are shown.
Based on automated and manual data capturing methods, the present study analyzes current consumer price changes. Combined with inflation adjusted data from the food and agricultural organization of the United Nations1
(United Nations - “FAO food price index” - 2022) a comprehensive dataset of price changes over the past years is generated. Based on this data a comparison between organic and conventional as well as plant- and animal-based food is conducted. Further various drivers of increasing food prices are examined by assessing different exemplary supply chains. By reviewing the impacts of past geopolitical instabilities, the general rising costs of production factors and external costs caused by environmental changes based on a literature research and analysis, predictions about the further price development can be assumed.
The general rise in food prices based on the “FAO food price index” is at 16,8% in the period between January and May 2022 but developments differ in the subsections. Grain futures for example increased by 57,8% with the price of sunflower oil increasing by 120% in the same period, while other products like fruits are only minimally impacted. Generally, animal products turn out to face higher cost expansions than plant-based products. Although organic products ought theoretically exhibit greater resilience to geopolitical factors, no difference has yet been observed between the price increase of these two product groups. Because of the extreme price change an uprising in the consolidation of the food industry can be observed. This leads to a decline of market share by smaller participants which increases the dependence on larger corporations with them using their market power for their advantage. By comparing current price developments to previous crises, predictions indicate that prices on the food market will not fall to pre-crisis levels in the medium turn.