How inflation, climate change and energy costs are pushing up food prices

In the US, inflation is now above six percent, and globally, food prices are at their highest since 2011. Climate change, energy demands and inflation are causing shortages and driving up costs in some of the poorest nations. Wall Street Journal reporter Samantha Pearson joins Hari Sreenivasan from Sao Paulo, Brazil, to discuss the crisis.

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  • Michael Hill:

    This holiday season, many Americans are noticing rising prices at grocery stores as the inflation rate reached more than six percent.

    Worldwide, the price of food is now at its highest level since 2011 according to the United Nations food and agriculture organization. Inflation, climate change, and energy costs are all contributing to severe shortages and increased costs in some of the poorest countries. In a recent Wall Street Journal story on the global surge in food prices reporter Samantha Pearson explored the crisis. She spoke with Hari Sreenivasan from Sao Paulo, Brazil where she is based.

  • Hari Sreenivasan:

    So Samantha, you've been covering how food prices have been skyrocketing in Brazil and Latin America, is there any one central reason why this is happening?

  • Samantha Pearson:

    So, yeah, we've been doing a lot of stories on, in fact, the global rise in food prices. But that's really hit Latin America hard, and it's heartbreaking to see that especially in places like Brazil where I'm based, I mean, Brazil, it just seems like we're finally coming out of the worst of the pandemic, which has had a horrific impact here. More than 600,000 people dead. And things are now meant to be better and now, as you say, food prices are rising and people can't afford to eat. Millions of people can't afford to eat. And the reasons for that are very varied across the world.

    I mean, it kind of depends on which country, it depends on which food group as well. But I think it's kind of two main reasons. So I think either because of the pandemic, the effects of the pandemic, but also climate change is having a kind of catastrophic impact as well.

    So I'll give you an example in Brazil. Inflation, you know, we're seeing double digit inflation at the moment, it's 11 percent. I'm one of the reasons for that is we're suffering the worst drought in almost a century, which has driven up energy prices, which is then adding to general inflation. So it's a whole host of catastrophic events, the pandemic, plus the catastrophic events of climate change that we're living through.

  • Hari Sreenivasan:

    So let's break that down a little bit on the climate change side, are we talking about essentially adverse or horrible kind of weather situations in different parts of the world affecting the supply of goods, meaning what's able to grow?

  • Samantha Pearson:

    Precisely, so, I mean, in Brazil, we've had a drought which has pushed up prices, but across parts of Asia that's exactly what we're seeing. So in India, we've seen terrible heavy rains, landslides that's affected just the production of vegetables like cauliflower, tomatoes, and pushed the prices of those items up. Also in China, the vegetable growing regions in China have been affected by heavy rains. That's affected prices there. So, it's basically bad weather, and also we've had terrible wheat harvests in the U.S. as well, Canada, Russia.

    Wheat prices that now are at the highest level in almost a decade as well. So on that, in terms of climate change, I'm talking about a lot of rain. And in Brazil's case, not enough rain. The West has had the worst drought in almost a century, which I mean, most people here attribute that to climate change.

  • Hari Sreenivasan:

    So the drought there has a knock on effect on hydroelectric, meaning the dams are not nearly producing as much energy. And so just like everything else, the less supply you have of something, the greater the demand, and the prices for electricity are going up as well.

  • Samantha Pearson:

    Precisely so, Brazil is a special country in that sense that we use a lot of hydroelectric power here, so we rely on hydroelectric dams for electricity. So when those dried up because of the drought, the government had to switch to thermal power plants, which are more expensive. So that's the reason that the drought then caused electricity prices to go up. So there's a lot of different things going on here. And then you have, as we said, the effects of the pandemic, right?

    So I mean, that's one of the causes is energy prices. As you know, energy crises have skyrocketed as countries emerge from lockdowns across the world. And then that obviously means that transporting food is more expensive and that is passed on to the final customer. We've seen particular situations, for example, Australia, they ship a lot of bad food out, a lot of exports out, and they just can't get enough stuff to go on the ships because everyone's so freaking out, rightly about getting COVID. Palm oil prices are rising, for example, because in Malaysia, they're struggling with labor shortages, migrant labor shortages.

    So this is kind of a whole host of reasons that have converged just at kind of like this heartbreaking time, you know, when especially the poor, we can talk about that a bit later, but the poor really are the ones that are suffering in places like Latin America.

  • Hari Sreenivasan:

    So we've heard about kind of supply chain slowdowns when it comes to things like computer chips, but you're talking about staples that people rely on, whether it's just we're talking rice and beans and vegetable oil, things that the poor rely on more so than the rich because this is all they eat.

  • Samantha Pearson:

    Exactly. So food price inflation always affects the poor more because the poor tend to spend a higher proportion of their income on food. And because they just don't have that cushion, that margin, you know, when prices go up, they don't have savings or they can't, you know, they live literally day to day. I mean, millions of people in Latin America live like that. So it's just been punishing.

    I mean, we've done a lot of reporting in Brazil's favelas, and it's just heartbreaking. I mean, inflation sounds like such a kind of academic subject, you know, but you see the effects of inflation on the poorest people. And the one thing that struck me really was that it comes down to choices at the end of the day because you can't afford to buy everything you need, so you have to make these heartbreaking choices about what to buy.

    So I mean, we met a woman, for example, she could buy cooking oil, but then she couldn't afford meat to cook or she buys meat, but then she can't afford cooking oil, so she has to cook, I mean, in Brazil, people are starting to cook on open fires with wood and alcohol, and it's just hugely dangerous. You know, if you've got kids, you know it can cause respiratory problems. And one woman, I mean, this particular scenario really got me in Brazil. We met a woman who didn't have enough money to buy clothes for her kids. She's got three kids. She didn't have enough money to buy clothes for her kids in Sao Paulo, which is where I'm based. We've had a lot of cold weather recently. But she knew that the only way for her kids to eat was to send them to school, because in Brazil, the government gives kids at school food, and that's probably the only decent meal they're going to get in the day for local families. So she had this heartbreaking decision and she was like, Well, I don't have enough money to give clothes to my kids, they're freezing, you know, they don't have enough clothes to keep them warm. But if I don't send them to school, they're not going to eat so it better they eat and get sick, or is it better they stay at home and don't get sick, but don't eat, you know, it's like, I mean, it's a humiliating position to be in as well for these families, you know, and they're angry. And this obviously has political consequences. And it's a huge problem in places like Brazil right now.

  • Hari Sreenivasan:

    Yeah. Samantha Pearson for The Wall Street Journal, joining us from Sao Paulo. Thanks so much.

  • Samantha Pearson:

    Thank you.

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