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Soaring food prices put businesses at risk

Rising global food prices, exacerbated by war-produced grain and fertilizer shortages in Ukraine, not only hurt households, but pose risks for multinational corporations, The Wall Street Journal reported Thursday (August 11).

One of the threats, according to the Journal, is that soaring food prices will spark political unrest.

“Food insecurity is one of the main topics in our business and one of the things you really have to pay attention to – there is no escaping it,” Srdjan Todorovic, who oversees the analysis of the terrorism and related threats at Allianz Global Corporate & Specialty, part of German financial services company Allianz, the Journal said. “It’s absolutely a global problem.”

Unlike other shortages, food shortages quickly test a population’s will to obey the law, said Nick Robson of Marsh, a subsidiary of insurance brokerage Marsh & McLennan Cos.

Some countries are more at risk than others, Robson said. Poor countries, of course, but also autocracies and nations that import a lot of food. Companies located in safer countries would still be vulnerable because of their operations in high-risk countries.

See also: Stressed consumers get some relief as July inflation drops to 8.5%

A United Nations report quoted by the Journal says the 2007 and 2008 food crises caused upheaval in 48 countries and prices weren’t as high then as they are now.

While food prices are below peaks reached just after Russia invaded Ukraine, they are still 44% higher than they were in 2020, according to an index cited by the Journal and maintained by the Food and Agriculture Organization of the United Nations.

Jimena Blanco, head of risk research firm for the Americas, Verisk Maplecroft, said: “Across the world we are seeing much higher potential exposure to civil unrest as people see their purchasing power drop rapidly. .”

Already rising fertilizer prices have sparked protests from farmers and truckers in Greece and Peru. In Sri Lanka, protests over anti-chemical fertilizer rules that have had the effect of hurting yields have led to demonstrations that have driven the country’s leader out.

A Marsh report concludes that 50 or more countries get at least 30% of their grain from Russia and Ukraine.

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